Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Provisional Order Bills (No Standing Orders applicable),

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill, referred on the First Reading thereof, no Standing Orders are applicable, namely:—

Land Drainage Provisional Order (No. 1) Bill.

Bill to be read a Second time Tomorrow.

Taunton Corporation Bill (by Order),

Second Reading deferred till Tuesday next.

Oral Answers to Questions — COAL INDUSTRY.

UPTON COLLIERY (ACCIDENT).

Mr. GEORGE GRIFFITHS: 1.
asked the Secretary for Mines if his attention has been called to the inquiry into the death of Horace Turner, who was gassed in Upton colliery on Whit Tuesday; and whether he can make a statement as to whether any prosecution is contemplated?

The SECRETARY for MINES (Mr. Ernest Brown): The evidence given at the inquest and the report of the divisional inspector are being examined, and if the hon. Member will repeat his question next Tuesday I expect to be in a position to reply.

MINE LIGHTING (REGULATIONS).

Mr. DAVID GRENFELL: 2.
asked the Secretary for Mines when the new code of regulations for mine lighting is to be put into force; and what the effect of these regulations will be?

Mr. E. BROWN: These regulations were formally made on 1st June, and will be published with an explanatory memorandum in the course of a few days.
The general effect of the regulations will be to facilitate and require a substantial improvement in mine lighting. All safety lamps used at the working face and for other specified work in the face area must satisfy higher standards of candlepower, and these standards must be reasonably maintained in pit service. On haulage roads a carefully controlled extension of fixed electric lights is permitted subject to new conditions designed to ensure safety against the risk of explosion; and whitewashing at junctions, passbyes and other important traffic points, as well as machinery rooms, is made compulsory. Other provisions of the regulations deal with lighting at the surface and at shaft insets and sidings.
One part of the regulations comes into force on 1st July and the other parts on 1st September, except that a period is allowed for the replacement of the large number of safety lamps now in use which fall short of the new lighting standards.
I take this opportunity to express my appreciation of the effective work done in many quarters—some outside the industry itself—which has combined to make possible a measure which I believe will prove to be a notable one in the history of health and safety legislation.

Mr. T. WILLIAMS: Will the hon. Gentleman tell the House what the standard of comparison is or what period of time is allowed during which the improved standard will come into operation?

Mr. BROWN: The hon. Member had better wait the publication of the regulations for an answer to his first supplementary question. The period allowed for replacement of existing lamps is two years four months from the 1st September; that is, until the 30th December, 1936.

Mr. GRENFELL: When the Minister is substituting lamps of higher lighting power for lamps of less illuminating power, will be make provision, where electric lamps are substituted for oil lamps, that there is a sufficient number of oil lamps or automatic gas protectors installed?

Mr. BROWN: There are other regulations dealing with that point to be considered.

Mrs. WARD: Has any appeal been made to arbitration by either masters or men?

Mr. BROWN: No, as the time allowed under the law has elapsed.

Mrs. SHAW: Will the new system of lighting prevent nystagmus?

Mr. BROWN: That is one of the reasons for it.

ARLEY MINE, LEIGH.

Mr. TINKER: 3.
asked the Secretary for Mines how many inspections have been made this year at the Arley Mine, Parsonage Collieries, Leigh; and will he give the date of the last one and the conditions prevailing, dry and wet bulb temperature readings?

Mr. E. BROWN: Four inspections have been made in this seam by His Majesty's Inspectors of Mines during the present year, the latest being on 17th May. On that occasion the temperatures at the face in the deepest part were 104° to 106° dry bulb, 80° to 83° wet bulb. These readings indicate that the air was relatively dry, and its cooling power was found to be good. Efforts are being continued to reduce the temperature of the workings, and work is in progress with a view to improving still further the ventilation at the face.

Mr. TINKER: When the inspector makes an examination does he make any inquiries from the management as to the effect which the temperature has on the men where any men have been overcome by the heat and have to be brought out?

Mr. BROWN: The inspector will take everything into consideration when he makes an examination. Four examinations have been made during the present year.

Mr. TINKER: Is the Minister aware that yesterday a case was heard before the court of referees, in which a man had fainted twice and had to be brought out on both occasions and was once unconscious for two hours; and that the court of referees granted him unemployment pay, which goes to prove that the man was
justified in not working in such conditions?

Mr. BROWN: The hon. Member had better put that down.

Mr. D. GRENFELL: When they are investigating the effects of higher temperatures in the deep mines, will they also pay special attention to the effect of increased atmospheric pressure on the health of the men?

Mr. BROWN: That is done. There is a committee under a distinguished chairmanship which has given continuous examination to this subject for years, and there are several reports.

Mr. PIKE: Is the number of men affected taken into consideration?

Mr. BROWN: The number of men is very large.

Mr. KIRKWOOD: I have a letter here from the secretary of the branch of the Miners' Union, and is it not the case that in this particular mine it is so hot that they cannot get the horses to work right up to the face where this man fainted as a result of the heat?

Mr. BROWN: The factor which is taken into consideration as regards the health of the men is not the dry bulb temperature, but the wet bulb, and, as I have said in previous replies, it is the considered opinion that it is not adverse to the health of the men.

Oral Answers to Questions — SOUTHERN RHODESIA.

Mr. LUNN: 4.
asked the Secretary of State for Dominion Affairs whether his attention has been drawn to a resolution by the Southern Rhodesian Parliament, claiming the benefits, rights and privileges of full responsible government and demanding the transference of the powers over native lands, now vested in the High Commissioner, to the Governor; and whether he will insist on the maintenance of the existing form of control over native affairs and the administration of the lands boards?

The UNDER-SECRETARY of STATE for DOMINION AFFAIRS (Mr. Malcolm MacDonald): My right hon. Friend has not received any communication from the Government of Southern Rhodesia regarding the resolution in question, but I understand that the Prime Minister of
Southern Rhodesia wishes, during his forthcoming visit to London, to discuss, amongst other matters, questions affecting the constitution and native policy. In the circumstances it would appear to be premature to make any statement at present on the points mentioned by the hon. Member.

Mr. LUNN: May we take it that before anything is done on the lines of this resolution, this House will have an opportunity of discussing the whole business?

Mr. MacDONALD: My hon. Friend had better raise that question, after the Prime Minister has visited this country.

Oral Answers to Questions — TRADE AND COMMERCE.

IMPORT DUTIES, CANADA (WOOL TEXTILES).

Mr. MABANE: 5.
asked the Secretary of State for Dominion Affairs whether he can give the House any information as to the result of the application made by the wool textile industry to the Canadian Tariff Board for a lowering of Canadian import duties on wool textiles?

Mr. M. MacDONALD: I understand that the Canadian Tariff Board have not issued any definite findings as a result of their inquiry into the Canadian import duties on certain wool textiles. My right hon. Friend has not yet received the Board's interim report on the subject, but, when he does so, he will send a copy to the hon. Member for his information.

DENMARK.

Sir WILLIAM DAVISON: 6.
asked the President of the Board of Trade whether his attention has been called to the fact that the Danish Government has refused to grant import licences to Danish nationals who desire to import British goods into Denmark, notwithstanding the large trade balance in favour of Denmark as against Great Britain; and what action has been taken by the British Government in the matter?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): The action of the Danish Government in reducing the value of licences for the import of certain United Kingdom goods during the first four months of the present year has already been the subject of representations to that Government.

Sir W. DAVISON: Can my hon. Friend say what is the result of these representations and whether it does not seem unneighbourly, to say the least, that this embargo should be put on our goods when there is a trade balance in favour of Denmark and we take such a large amount of their agricultural supplies?

Dr. BURGIN: All these points are being borne in mind, but we had better wait for the reply.

Mr. HANNON: Was the action of the Danish Government within the four corners of the Trade Agreement?

Dr. BURGIN: It is in reference to that point that the representations have been addressed to Denmark.

Captain DOWER: How long ago did we make representations to the Danish Government?

Dr. BURGIN: The representations have not been replied to in full to the satisfaction of His Majesty's Government. I do not know whether there is any point as to the actual date; if so, I will ascertain it and communicate with the hon. Gentleman.

POLAND.

Mr. LOFTUS: 7.
asked the President of the Board of Trade if he can give any information as to the progress of the negotiations with Poland for a trade agreement; and when he anticipates their conclusion?

Dr. BURGIN: Commercial negotiations with Poland have not yet begun but it is hoped to start them this month.

TRADE DESCRIPTIONS.

Captain ARTHUR HOPE: 8.
asked the President of the Board of Trade whether he proposes to take any action with a view to providing machinery for the more satisfactory definition of trade descriptions?

Dr. BURGIN: My right hon. Friend has consulted a number of trade associations on the subject and hopes shortly to introduce a Bill dealing with it. Whilst it is, he fears, unlikely that it will be possible to proceed with the Bill this Session, he is anxious to give the various interests concerned full opportunity of considering its provisions.

BICYCLE COVERS AND TUBES.

Mr. HANNON: 9.
asked the President of the Board of Trade if his attention has been called to the sale of pedal-bicycle covers and tubes of foreign origin offered for sale at 6d. each in Birmingham and other centres in the Midlands; and if any steps are being taken to safeguard more adequately the production of these articles in this country?

Dr. BURGIN: My right hon. Friend's attention has not hitherto been called to the circumstances referred to. The question of any increase in the protection given to the home industry is, in the first place, a matter for the consideration of the Import Duties Advisory Committee.

Mr. HANNON: Will my hon. Friend have inquiries made to ascertain whether the offer of these covers and tubes at this particular price is a spasmodic action on the part of some foreign country, or is to be continuous in our markets?

Mr. T. WILLIAMS: Has the hon. Gentleman any power to make such inquiries in view of the existence of the Advisory Committee?

Dr. BURGIN: Certainly there is power to make all and any inquiries when a matter is brought to the attention of the President of the Board of Trade, and inquiries will be made to see whether this incident is sporadic and spasmodic or whether it is likely to be permanent. The import of these articles is at the rate of something like 300,000 in a normal year, by contrast with a home production of nearly 7,000,000, so that it is a small import.

Mr. PIKE: Can the hon. Gentleman say what the importation of pocket knives in Sheffield from the same source amounts to?

Oral Answers to Questions — BRITISH ARMY.

MILITARY SECRETARY.

Mr. DOBBIE: 10.
asked the Financial Secretary to the War Office on what date the appointment of the present military secretary to the Secretary of State for War was made; the date on which he took over his duties and the period for which his appointment has been made; and the date on which the previous holder of the appointment took
office, the length of the term of the appointment, and the date on which it was terminated?

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Duff Cooper): The present military secretary was selected, and his appointment announced in the Press, in November, 1933. He assumed the appointment, which is for four years, on 1st June, 1934. His predecessor held the appointment for the usual term of four years from 1st June, 1930.

TERRITORIAL ARMY (BRITISH UNION OF FASCISTS).

Mr. GURNEY BRAITHWAITE: 11.
asked the Financial Secretary to the War Office whether officers, non-commissioned officers, and other ranks borne on the strength of the Territorial Army are at any time permitted to wear the uniform of the political organisation known as the British Union of Fascists?

Mr. COOPER: Officers and other ranks of the Territorial Army, when not undergoing training, are in the same position as civilians with regard to political organisation, except that they may not attend political meetings in military uniform.

Mr. BRAITHWAITE: Will my hon. Friend bear in mind the unfortunate effect upon public opinion when persons who are known to be Territorials appear in the streets wearing the uniform of a political organisation which is constantly provoking civil disturbance?

Mr. DOBBIE: Will the Minister inform the House whether it is permissible for military decorations to be worn along with political uniforms, and, if not, will he take the necessary steps to deal with the offenders?

Mr. COOPER: That is another question, of which I ought to have notice.

Mr. LAWSON: Will the War Office consider whether any member of the Territorial Force can serve two armies at once?

Mr. MAXTON: Will it be permissible for the members of that organisation to distribute the literature of their political party when engaged on Territorial duties?

Oral Answers to Questions — SCOTLAND.

POOR RELIEF, FIFE.

Mr. KIRKWOOD: 12.
asked the Secretary of State for Scotland if he is aware that the Fife County Council are violating the Act of 1924 by refusing to exempt the first 7s. 6d. a week of health insurance benefit when assessing the incomes of applicants for relief; and will he take action to compel this local authority to conform to the law, or any other authority which is similarly at fault?

The UNDER-SECRETARY of STATE for SCOTLAND (Mr. Skelton): The allegation that Fife County Council were not observing the requirements of Subsection one of Section 105 of the National Health Insurance Act, 1924, was recently brought to the notice of the Department of Health, who are at present in communication with the county council. With regard to the second part of the question I would refer the hon. Member to my supplementary answer on this subject given to the hon. Member for Gorbals (Mr. Buchanan) on the 8th March, of which I am sending him a copy.

Mr. KIRKWOOD: Arising out of the first part of the reply, in the event of the Fife County Council not acting according to law, as they are asked to do in a communication from the Scottish Office, what action will the Scottish Office take?

Mr. SKELTON: A specific case has arisen with regard to one individual, and where those are the circumstances the proper course is to appeal against inadequate relief, which I understand is the course which has been taken here. With regard to the general subject, perhaps my hon. Friend will be good enough to read the supplementary answer to which I have referred and put down another question if that does not make the matter clear to him.

Mr. PIKE: Can my hon. Friend say what connection the Fife County Council has with Dumbarton Burghs?

Mr. KIRKWOOD: If I put down a question for next week, will the hon Gentleman then be in a position to give me an answer?

Mr. SKELTON: I think if the hon. Member will read my answer, he will see what the position is.

Captain CROOKSHANK: Would the hon. Gentleman not be more likely to give an answer to an hon. Member who sat for Fife?

VAGSANTS.

Lord SCONE: 13.
asked the Secretary of State for Scotland if he will add to the terms of reference of the newly constituted committee of inquiry into vagrancy in Scotland an instruction that the committee shall ascertain, as far as possible, the percentage of Vagrants, and other persons of the wayfaring classes at present living in Scotland, that are of Irish birth and the percentage that are Scottish born but of Irish parentage, respectively?

Mr. SKELTON: My right hon. Friend does not propose to accept my Noble Friend's suggestion.

Lord SCONE: Is my hon. Friend aware that the population of many poor houses in Scotland at certain seasons of the year comprises 75 per cent. and upwards of persons born in the Irish Free State, and does he not think that requires some investigation?

Mr. SKELTON: The present committee has been charged with the investigation of the conditions under which vagrants and other persons of that class are at present living in Scotland, and no doubt if the committee, in the course of their investigation, take the view that it is necessary to obtain information as to the number of vagrants of any particular nationality they will do so.

Mr. MACQUISTEN: Are they not all fleeing from de Valera—or most of them?

WHITE FISH (LANDINGS, ABERDEEN).

Mr. BURNETT: 14.
asked the Secretary of State for Scotland the weight and value of white fish landed at Aberdeen by British and by foreign boats, respectively, in the first five months of 1932, 1933 and 1934?

Mr. SKELTON: As the answer involves a table of figures, I propose with the hon. Member's permission to circulate it in the OFFICIAL REPORT.

Following is the answer:

The quantity and value of white fish landed at Aberdeen by British and foreign fishing vessels respectively
during the first five months of each of the last three years were:




British.





Cwt.
£


1932
…
…
754,178
645,012


1933
…
…
712,514
620,327


1934
…
…
620,210
710,973


Foreign.





Cwt.
£


1932
…
…
451,813
133,814


1933
…
…
390,163
127,759


1934
…
…
210,243
94,768

HOUSING.

Mr. JOHN WALLACE: 15.
asked the Secretary of State for Scotland whether he will give particulars of the returns made by local authorities up to date to the Department of Health of the number of houses to be erected during the five years 1934 to 1938, respectively, to replace houses unfit for habitation, to accommodate persons living under overcrowded conditions, and for others of the working classes, such as married persons living with relatives, or in sub-lets or in lodgings, and persons desirous of getting married for whom accommodation is not likely to be available?

Mr. SKELTON: According to the returns received from all but eight local authorities in Scotland it is estimated that there will be provided during the five years referred to 44,222 houses to replace unfit houses, 24,160 to abate overcrowding, and 6,299 to meet other needs. In addition 1,002 houses have yet to be allocated among these purposes, making a total of 75,683 houses likely to be provided.

Mr. GUY: May I ask whether the hon. Gentleman is satisfied with the total?

Mr. SKELTON: I am never satisfied with anything short of perfection, and there are still some local authorities whose programmes I am taking measures to try to increase.

Mr. WALLACE: 16.
asked the Secretary of State for Scotland if he will give an estimate of the financial commitments of the Government under the Housing (Scotland) Act, 1930, for subsidy in replacing houses unfit for habitation; under the Housing (Financial Provisions) (Scotland) Act, 1933, for subsidy in re-housing persons now living in overcrowded conditions;
and which would be incurred by the provision of a subvention to local authorities for housing others of the working classes whose needs cannot now be met?

Mr. SKELTON: The estimated financial commitments of the Government are £336,950 per annum for 40 years in respect of houses to replace unfit houses approved up to the 8th June under the Housing (Scotland) Act, 1930; and £2,823 per annum for 40 years in respect of houses to abate overcrowding approved up to the same date under the Housing (Financial Provisions) (Scotland) Act, 1933. My right hon. Friend regrets that he is not in a position to give the estimate desired in the last part of the question.

Mr. KIRKWOOD: Is it not the case that local authorities in Scotland are not taking advantage of the 1933 Act?

Mr. SKELTON: Not very great advantage has been taken of that Act so far as it intends to deal with overcrowding, but my hon. Friend is aware that consideration is being given to the question of further proposals with regard to overcrowding.

Mr. WALLACE: 17.
asked the Secretary of State for Scotland whether he has considered the resolution from the annual meeting of the Scottish National Housing and Town Planning Committee at Peebles on 2nd and 3rd March regarding the impossibility in Scotland at present of building houses for the working class at reasonable rents and the inadequacy of the annual Government grant to local authorities under the Act of 1933 for housing low wage earners in overcrowded conditions, and urging more Government assistance; and whether he will now recommend an increased Government grant and also submit proposals for renewal of local authorities' activity upon ordinary housing with suitable Government aid?

Mr. SKELTON: The answer to the first part of the question is in the affirmative. As regards the second part, my right hon. Friend is at present actively engaged in considering what additional measures are necessary for the provision of further houses to abate overcrowding in Scotland.

Mr. WALLACE: Will my hon. Friend give me a reply to the last part of the question, which I think he must have overlooked?

Mr. SKELTON: It is not intended to make special provision' by the State for the supply of ordinary houses. Already several local authorities in Scotland are providing such houses without subsidies.

Mr. MACQUISTEN: Would there not be plenty of houses in Scotland if the Irish were all repatriated?

Oral Answers to Questions — AFFORESTATION (CANNOCK CHASE).

Mrs. WARD: 18.
asked the hon. and gallant Member for Rye, as representing the Forestry Commissioners, whether the Forestry Commission have any land for planting on Cannock Chase; and whether, having regard to the local demand for timber for pit-wood and the available supply of local unemployed for the work, they will undertake planting in the immediate future?

Colonel Sir GEORGE COURTHOPE (Forestry Commissioner): The Forestry Commission still have land for planting on Cannock Chase, and will plant a further 160 acres next season.

Oral Answers to Questions — POLICE SEARCH, SUSSEX (ASSISTANCE).

Mr. D. GRENFELL: 19.
asked the Secretary of State for the Home Department whether he is aware that in the recent search in Sussex for a person wanted for shooting a constable, Fascists from their London headquarters participated; and whether the organised assistance of members of this political party was sought by the Criminal Investigation Department?

The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Gilmour): I have made inquiries and am informed that amongst the large number of members of the public who participated in this search were some persons belonging to the Fascist movement. No application for assistance was made by the police to this or any other political organisation, and, in fact, the Chief
Constable definitely refused an offer to obtain a large number from London, but persons who were willing to help the police in their search (including a few who came from London) were welcomed as individuals without regard to their membership of a political organisation.

Mr. MACQUISTEN: Is it not the duty of every citizen to assist the police?

Mr. GRENFELL: Is it the case that these men came in uniform and took part in the search in uniform?

Sir J. GILMOUR: That may be the case. I am not sure.

Mr. GRENFELL: Does not the uniform signify that they claim authority from some other source than the right hon. Gentleman's helpers?

Mr. MACQUISTEN: Might not the wrong doer have been concealed up a chimney and in a black suit and in a black shirt?

Oral Answers to Questions — SHIPBUILDING ACCIDENT.

Mr. THORNE: 20.
asked the Home Secretary whether he has received a report from one of his inspectors in connection with a fatal accident that occurred to a workman employed on the new Cunarder; and whether the scaffolding was properly protected and secured?

Sir J. GILMOUR: I have called for a report and will communicate with the hon. Member.

Oral Answers to Questions — UNEMPLOYMENT.

TRANSITIONAL PAYMENTS.

Mr. MANDER: 21.
asked the Minister of Labour whether it is the intention of his Department that public assistance committees should have discretion to increase by 10 per cent. transitional payments now being made to meet the scale of needs after 1st July assuming the need remains unchanged?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. R. S. Hudson): I would refer the bon. Member to the statement made by my right hon. Friend the Chancellor of the Exchequer on 23rd April in the Committee stage of the Unemployment Bill.

Mr. MANDER: Could not my hon. Friend say clearly whether it is the fact that a public assistance committee has those discretionary powers? Would it not relieve a great deal of anxiety?

Mr. HUDSON: I hope the hon. Member will read the statement made by my right hon. Friend.

Mr. MANDER: Can my hon. Friend say "Yes" or "No" to the question I put to him?

Mr. G. GRIFFITHS: 28.
asked the Minister of Health how many cases on transitional payments in the West Riding County Council have received relief from the public assistance committee with doctors' notes, and how many have received relief without doctors' notes?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): The total number of cases in receipt of transitional payments supplemented by poor relief in the administrative county of the West Riding of Yorkshire was 2,121 during the week ending the 10th February, 1934. My right hon. Friend regrets that he has no information as to the numbers in each of the categories mentioned by the hon. Member.

NORFOLK (SUGAR-BEET HOEING).

Mr. THOMAS COOK: 22.
asked the Minister of Labour the position of unemployment in the rural areas of Norfolk, with particular reference to the labour available for hoeing sugar-beet?

Mr. HUDSON: The numbers of workpeople registered for employment at local offices in rural areas in Norfolk on the 4th June were 1,545 men, 299 women and 81 juveniles, making a total of 1,925. Of these, 98 were considered suitable for sugar-beet hoeing.

Captain HEILGERS: Can the Minister say whether any labour has been imported from outside areas?

Mr. HUDSON: I understand that in one case in Norfolk a request was made for men to be brought from Durham, and steps were taken to comply with the request.

STATUTORY COMMITTEE.

23. The following question stood upon the Order Paper in the name of Mr. THORNE:

To ask the Minister of Labour why the hon. Member for Gorbals (Mr. Buchanan) was officially invited to become a member of the Statutory Committee under the new Unemployment Bill, seeing that the organised workers' representatives must be nominated by the members of the Trades UnionCongress General Council; that the employers' representatives must be nominated by the Federation of British Industries; and that such an official invitation to the hon. Member for Gorbals is a breach of the regulations under the Unemployment Bill?

Mr. THORNE: Before the hon. Gentleman replies to my question, may I ask if he is aware that I wrote to the hon. Member for Gorbals (Mr. Buchanan) telling him that the question was being asked to-day?

Mr. HUDSON: No steps have yet been taken to select any of the members of the Statutory Committee, and there is consequently no foundation for the rumour to which my hon. Friend refers.

Mr. MAXTON: I would like to ask the hon. Gentleman, as representing the Ministry of Labour, if anyone has suggested that the hon. Member for Gorbals (Mr. Buchanan) has been officially invited to take part in this Statutory Committee?

Mr. THORNE: Is the Minister aware that, according to the "New Leader" last week, the hon. Member for Gorbals definitely stated at the Merthyr by-election that he had been invited by a representative of the Government to take up this position?

Mr. MAXTON: Is not the hon. Member for Plaistow (Mr. Thorne) completely misinformed?

Sir NAIRNE STEWART SANDEMAN: Does the Minister not think that the hon. Member for Gorbals (Mr. Buchanan) would make a very good Member?

Mr. HUDSON: I repeat that no steps have been taken to select any members for this Statutory Committee?

Mr. MAXTON: May I ask if the statement made in the question is correct, that appointments are to be made by the Trades Union Congress General Council?

Mr. MACAUISTEN: Would they not make a very foolish selection?

ALLOTMENTS (WALES).

Mr. TEMPLE MORRIS: 24.
asked the Minister of Agriculture if he is satisfied that the best possible provision is being made in Wales for the creation of allotments for the unemployed; and, if not, what steps he is taking to stimulate action in this direction?

The MINISTER of AGRICULTURE (Mr. Elliot): I have no reason for thinking that the demand for allotments on the part of unemployed persons in Wales is not being met so far as is practicable. If, however, my hon. Friend has any information to the contrary and will let me have the necessary particulars, I will gladly look into the matter.

Oral Answers to Questions — TRANSPORT (TOLL BRIDGES, WALES).

Mr. T. MORRIS: 25.
asked the Minister of Transport if he will state the toll bridges which exist in Wales, apart from the Menai and Conway bridges; and whether he has considered the desirability of recommending to the local authorities concerned the purchase of such toll bridges in the public interest?

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Lieut.-Colonel Headlam): My information is that, apart from the Menai and Conway bridges, there are on public roads in Wales seven bridges on which tolls are regularly charged, of which only one is on a classified road. There is also one bridge on a classified road on which tolls are charged on one day in each year. From time to time my hon. Friend has reminded highway authorities of their powers under the Road Traffic Act, 1930, to take over toll roads and bridges, and of his willingness to consider applications which may be made for assistance towards expenditure thus incurred.

Mr. MACQUISTEN: Are there any bridges where a toll of 10s. is charged for crossing, as in Argyllshire?

Oral Answers to Questions — DISARMAMENT CONFERENCE.

Mr. MANDER: 26.
asked the Secretary of State for Foreign Affairs if he will consider the advisability, as a way out of the present disarmament deadlock, of pro-
posing the establishment, in connection with the League of Nations, of an impartial tribunal to decide justiciable disputes and an international police force to see that its decisions are observed?

The LORD PRIVY SEAL (Mr. Eden): As the hon. Member will be aware, a resolution was adopted by the General Commission of the Disarmament Conference on the 8th June, laying down the lines on which the work of the Conference is to continue. A tribunal of the kind referred to by the hon. Member already exists in the Permanent Court of International Justice.

Mr. MANDER: Is the right hon. Gentleman not aware that I am referring to non-justiciable disputes, but the world court only deals with justiciable disputes?

Mr. EDEN: I am referring to the question which was asked on the Paper by the hon. Member.

Oral Answers to Questions — TURKEY (STRAITS CONVENTION).

Mr. MANDER: 27.
asked the Secretary of State for Foreign Affairs if he has any statement to make with reference to the conversations that took place at Geneva recently on the subject of the Turkish proposal for the remilitarisation of the Dardanelles zone?

Mr. EDEN: I would refer the hon. Member to the answer given yesterday on this subject to the hon. Member for Westhoughton (Mr. Rhys Davies) and my hon. and gallant Friend the Member for St. Marylebone (Captain Cunningham-Reid), to which I have nothing to add.

Oral Answers to Questions — COLONIES (ECONOMIC SURVEY).

Dr. McLEAN: 30.
asked the Secretary of State for the Colonies when the promised survey of production and trade development in the Colonies will be published?

The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister): The volume will be published to-morrow morning as a non-Parliamentary publication under the title of "An Economic Survey of the Colonial Empire." Copies will be available for hon. Members in accordance with the usual arrangements. I should like to take this opportunity of thanking my hon. Friend for his valuable assistance in its preparation.

Oral Answers to Questions — PALESTINE (ILLICIT SETTLEES).

Lieut.-Colonel TODD: 31.
asked the Secretary of State for the Colonies whether any illicit immigration is still going on in Palestine; what the numbers of illicit immigrants now are; and what steps are being taken to deal with this problem?

Sir P. CUNLIFFE-LISTER: The latest report available shows that during the three months, November, 1933, to January, 1934, the number of illicit settlers was estimated to average 300 a month, as compared with an average of about 1,000 a month during the first 10 months of 1933. The steps that are being taken to deal with this problem were explained in the reply to a question by the hon. and gallant Member for the Isle of Wight (Captain P. Macdonald) on 9th November last. I will send a copy of this reply to my hon. and gallant Friend.

Captain STRICKLAND: Is not this illicit immigration largely due to the Government's restriction of legal immigration, which is holding up housing, agricultural, and industrial development in that country?

Sir P. CUNLIFFE-LISTER: That is a series of complete mis-statements. It is not Government action which is responsible for illicit immigration. It is surely in the interests of everybody concerned that the immigration which comes into Palestine should be authorised immigration, so that every immigrant may come through the recognised channels as the most deserving and suitable.

Captain STRICKLAND: Is the right hon. Gentleman not aware that in Palestine, houses are awaiting workers and cannot be completed for want of labour?

Sir P. CUNLIFFE-LISTER: I have dealt with this many times in the House, and it is not easy to do so in answer to a supplementary question; but I will say two things. First, in deciding the number of immigrants into Palestine, the High Commissioner must look to the general future of the country as well as to the immediate present. In the second place, over and over again he has said that if skilled workers of a particular class are available they will have particular consideration, but that you do not provide skilled workers for housing by offering a number of unskilled workers and other persons.

Mr. KIRKWOOD: Are there not tens of thousands of people in this country wanting houses who cannot get them, never mind Palestine?

Oral Answers to Questions — NATIONAL FINANCE.

UNITED STATES (BRITISH DEBT).

Lieut.-Colonel TODD: 32.
asked the Chancellor of the Exchequer whether the British Government pledged itself to repay in gold any, or all, of the £500,000,000 borrowed from the United States of America during 1917–18; and, if so, at what notice?

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): The obligations given by His Majesty's Government were payable in gold dollars, but all provisions of this nature are subject to the United States legislation of 5th June, 1933, under which every obligation is payable in legal tender dollars. The advances referred to were repayable either at very short notice, or, in the great majority of cases, at demand; but, as stated in the reply given to my hon. and gallant Friend on the 5th June, they were funded in 1923.

SUGAR INDUSTRY (GOVERNMENT ASSISTANCE).

Mr. LEONARD: 33.
asked the Chancellor of the Exchequer of he will state the total assistance granted from the British Exchequer, either by grant or remission of duty, to the sugar industries in British Dominions and Possessions since 1918?

Mr. CHAMBERLAIN: The approximate cost to the Exchequer of the preferential abatement of duty on Empire sugar and molasses during the period of over 14 years from the 1st September, 1919, when preference was introduced, to the 31st March, 1934, was £28,853,000. In addition grants amounting to approximately £21,300 have been made from the Colonial Development Fund and the Empire Marketing Fund to certain Colonial Governments for the purpose of sugar research and schemes benefiting the sugar industry.

INCOME TAX (INTEREST RETURNS).

Sir ROBERT HAMILTON: 34.
asked the Chancellor of the Exchequer whether he is aware that it is the practice of
inspectors of taxes to issue annually to bankers, solicitors, and others, forms requiring returns to be made of all sums of interest received by them on behalf of clients or customers, and thereafter to issue notices of assessment to Income Tax on such sums; that inconvenience and loss is caused by the fact that such forms are issued only once in each year; and whether he will instruct inspectors of taxes to issue such forms quarterly, and also to authorise the inspectors of taxes at any time on production of certificates of interest collected to assess the Income Tax thereon, and issue notices of assessment and receive payment of the tax?

Mr. CHAMBERLAIN: I assume that the hon. Member refers to the returns required under Section103 of the Income Tax Act, 1918. I am not aware that the existing procedure under which the return forms are issued annually causes inconvenience and loss. Under the provisions of the Income Tax Acts the assessments are made annually, the basis of assessment is normally the amount arising in the preceding year, and the tax is payable in one sum on 1st January. In these circumstances an annual return is clearly appropriate, and I see no reason for any such changes in the law as the hon. Member's proposals would involve.

LAND VALUES (TAXATION).

Mr. LEES-JONES (for Captain FULLER): 35.
asked the Chancellor of the Exchequer in view of the confusion which exists regarding land taxation and the unanimity of opinion as to the justice of a tax on increment values, he will take steps to clarify the existing position and introduce legislation to effect an increment values tax?

Mr. CHAMBERLAIN: I cannot make any promise such as my hon. and gallant Friend suggests.

OATS (IMPORT DUTY).

Sir ROBERT SMITH: 36.
asked the Financial Secretary to the Treasury what sum has been collected since the duty on oats was raised to 3s. a cwt.?

The FINANCIAL SECRETARY to the TREASURY (Mr. H ore-Belisha): The approximate amount of duty collected on oats in grain from the 13th January, 1934,
when the duty was 3s. a cwt. came into operation, to the 30th April, 1934, the latest date to which information is available, is £122,000.

Oral Answers to Questions — TRADE FACILITIES ACT (BEET-SUGAR COMPANIES).

Mr. GRAHAM WHITE (for Mr. MALLALIEU): 37.
asked the Financial Secretary to the Treasury to what extent repayments of advances made to beet-sugar companies under the Trade Facilities Acts are in arrear; what payments have been made by the Treasury in respect of principal and in respect of interest; what steps have been taken to ensure repayment; and whether any of these payments are regarded as irrecoverable?

Mr. HORE-BELISHA: With reference to the first two parts of the question, I would refer the hon. Member to the reply which I gave on the 27th April last to the hon. Member for South Bradford (Mr. Holdsworth). In reply to the third part of the question, any sums advanced by the Treasury to implement a guarantee constitute a secured debt from the company to the Treasury, the service of which ranks immediately after the service of the original loan. The company is of course unable to pay any dividend while the service of these loans is in arrear. In reply to the fourth part of the question, a sum of £171,180 has been written off as irrecoverable in connection with the Orchard Sugar Company, Limited, which went into liquidation on the 30th March, 1928.

Oral Answers to Questions — STEAMER "TREFFRY."

Mr. T. MORRIS: 38.
asked the Financial Secretary to the Treasury whether his attention has been called to the breakdown in the Channel of the steamer "Treffry," which has put into Boulogne in difficulties; whether he is aware that this ship is carrying a large quantity of tobacco; whether this cargo was intended for this country; and whether there is any notable increase in smuggling of tobacco and other commodities along any section of the coast?

Mr. HORE-BELISHA: The facts of this case have been brought to my notice. There is reason to believe that the tobacco on the "Treffry" was intended to be landed in this country. I understand
that the vessel has been wrecked off Dunkirk. I have no reason to think that there has been any notable increase recently in smuggling on our coasts.

Oral Answers to Questions — ECONOMIC ADVISORY COUNCIL.

Mr. D. G. SOMERVILLE: 39.
asked the Prime Minister whether the Chief Economic Adviser to His Majesty's Government attends the meetings of the Economic Advisory Council; and, if not, what arrangements exist to ensure cooperation between them?

The LORD PRESIDENT of the COUNCIL (Mr. Baldwin): The answer to the first part of the question is in the affirmative; the second part does not, therefore, arise.

Mr. SOMERVILLE: 40.
asked the Prime Minister how many meetings of the Economic Advisory Council were held during the current year, up-to-date, and 1933, respectively; what was the total cost of its activities during 1933; and whether he is still satisfied that its maintenance is a necessity?

Mr. BALDWIN: The work of the Economic Advisory Council and of its committees is confidential. The cost of the Council, including salaries, wages and miscellaneous items, amounted in the year 1933–34 to the sum of £5,520. The answer to the last part of the question is in the affirmative.

Mr. MAXTON: Is this Committee so confidential that we cannot be told whether it has met, and how often? Surely that is carrying confidence to an extreme?

Mr. BALDWIN: The confidential nature of its proceedings was specified in the Treasury Minute which was laid before the House four years ago, when the Committee was set up; and the term "confidential" in regard to its work does include a certain amount of privacy in regard to its meetings.

Mr. KIRKWOOD: What good has emanated from this Advisory Economic Council? What have we got for our £5,000?

Mr. MAXTON: Might I ask the Lord President whether, if it has not met at all, there is any reason for making a great
secret of it? Is it necessary in the public interest to keep that quiet?

Mr. BALDWIN: I think the body meets frequently, but this answer has been given repeatedly by the Head of the Government, and I am giving it for about the fourth or fifth time now.

Mr. KIRKWOOD: Have they produced anything? Have they suggested anything to the Government?

Mr. MACQUISTEN: They can always telephone each other.

BUSINESS OF THE HOUSE.

Mr. WALTER REA: May I ask the Lord President of the Council whether he has any alteration to announce in the business for Thursday?

Mr. BALDWIN: Yes, Sir. I understand that the hon. Gentleman and his friends wish the Home Office Vote to be taken on Thursday, instead of the Ministry of Health Vote, which was originally asked for. The business will be the Home Office Vote.

NEW MEMBER SWORN.

Stephen Owen Davies, esquire, for the Borough of Merthyr Tydvil (Merthyr Division).

PATENTS AND DESIGNS.

3.16 p.m.

Mr. JOHN WILMOT: I beg to move,
That leave be given to bring in a Bill to amend the law relating to patents and designs by providing for the protection of employé inventors.
The object of this short Bill is to fill a gap in the present patent law as it affects the rights of inventors who are employés, and to provide such employé inventors with an added protection under the law. I think it will be agreed that at present there is a widespread feeling that employés like draughtsmen and technicians of various kinds who make considerable contributions to industrial progress by way of their inventions often fail to secure adequate remuneration for their inventions. The difficulty arises from the complicated procedure which forms the only method whereby their grievances can
be redressed. I think it is already recognised that the patent of an employé must be taken out in his name as the true and first inventor, and it is recognised by the authorities on patent law that, in the absence of a special contract the invention of a servant, even though made in the employer's time, with the use of the employer's material, and at the expense of the employer, does not become the property of the employer so as to justify him in opposing the grant of a patent for the invention to the servant who is the proper patentee. The aim of the present Bill is to implement that well understood principle and to provide machinery for the purpose.
The Bill seeks to secure for the employé inventor the proper remuneration that should be his due, and, secondly, to enable the employé to deal with and exploit the invention where the employer purposely or negligently refrains from making the best use of the patent. I have had the benefit of the advice of a number of professional men who are engineering and shipbuilding draughtsmen, and of the National Federation of Professional Workers, many of whose members in affiliated organisations are professional workers of this kind and have had very unhappy experiences in dealing with their patents.
We have given a considerable amount of thought to the best manner in which this position can be simply and easily remedied, and with this aim in view, and from a study of the patent law, it would appear that the new provision that was introduced into the Patents and Designs Act, 1919, provided a very useful basis for Amendment. In that Act it is provided, in the special case of patents in connection with the preparation of foodstuffs and medicines, that the Comptroller-General of Patents, Designs and Trade Marks may grant to any person applying a licence for the use of the patent and may settle the terms upon which such licence shall be granted and fix the amount of royalty or other consideration payable. This Bill is introduced with the intention of extending that machinery to be used in the case of applications by employé inventors. It provides that any employé whose name appears upon a patent as the first true inventor or patentee either singly or jointly with his employer may apply
at any time after the sealing of the grant to the Comptroller to settle the terms, securing to the employé an adequate interest in or remuneration for the invention, and to fix the amount of royalty or other consideration payable to the employé; and, where at any time it appears that the employer abuses the monopoly rights in the patent, for leave to deal with the patent either by way of licence or disposal in such manner as the Comptroller may deem to be appropriate and expedient. I believe the Bill will remove what is an admitted grievance and injustice.

Question put, and agreed to.

Bill ordered to be brought in by Mr. John Wilmot, Mr. Charles Brown, Mr. Cocks, Mr. Rhys Davies, Mr. Neil Maclean, and Mr. West.

PATENTS AND DESIGNS BILL,

"to amend the law relating to patents and designs by providing for the protection of employé inventors," presented accordingly, and read the First time; to be read a Second time upon Tuesday, 26th June, and to be printed. [Bill 136.]

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE B.

Mr. William Nicholson reported from the Committee of Selection; That they had added the following Ten Members to Standing Committee B (in respect of the Public Meeting Act (1908) Amendment Bill): Mr. Aneurin Bevan, Mr. Stuart Bevan, Lieut.-Colonel Gault, Mr. Hacking, Mr. George Harvey, Mr. Lewis Jones, Mr. Lyons, Mr. Pickering, Mr. Bracewell Smith and the Solicitor-General for Scotland.

STANDING COMMITTEE C.

Mr. William Nicholson further reported from the Committee; That they had added the following Ten Members to Standing Committee C (in respect of the Mines (Working Facilities) Bill [Lords]): Lieut.-Commander Agnew, Mr. An-struther-Gray, Lord Balniel, Mr. Ernest Brown, Mr. Daggar, Mr. Everard, Capt. Michael Hunter, Mr. Haydn Jones, Mr. Nunn and Dr. Peters.

Reports to lie upon the Table.

MESSAGE FROM THE LORDS.

That they have agreed to,—

Corby (Northants) and District Water Bill, without Amendment.

Southern Railway Bill,

South West Suburban Water Bill, with Amendments.

That they have passed a Bill, intituled, "An Act to confirm a Provisional Order of the Minister of Health relating to the Burnham, Dorney, and Hitcham Waterworks Company, Limited." [Ministry of Health Provisional Order Confirmation (Burnham and District Water) Bill [Lords].]

Also a Bill, intituled, "An Act to confirm a Provisional Order of the Minister of Health relating to the Herriard and Lasham Water Company, Limited." [Ministry of Health Provisional Order Confirmation (Herriard and District Water) Bill [Lords].]

Al so a Bill, intituled, "An Act to confirm a Provisional Order of the Minister of Health relating to the Sheppey Water and Lighting Company, Limited." [Ministry of Health Provisional Order Confirmation (Sheppey Water) Bill [Lords].]

Also a Bill, intituled, "An Act to transfer to the Urban District Council of Wantage the undertaking of the Wantage and District Water Company, Limited; to authorise the Council to supply water; and for other purposes." [Wantage Urban District Council Bill [Lords].]

And also, a Bill, intituled, "An Act to extend the time for the construction of the Burnhope Reservoir and other works; to authorise the Durham County Water Board to continue to take water temporarily from the Burnhope Burn; to empower the Water Board to purchase further lands and construct a gauge-weir; to extend the limits of supply of the Water Board and to transfer part of the area within those limits to the limits of supply of the Newcastle and Gateshead Water Company; to make further provision with regard to the payments to be made to the Water Board by the Sunderland and South Shields Water Company in respect of the Burnhope Reservoir; and for other purposes." [Durham County Water Board Bill [Lords].]

MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (BURNHAM AND DISTRICT WATER) BILL [Lords].

Read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 138.]

MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (HERRIARD AND DISTRICT WATER) BILL [Lords].

Read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 139.]

MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (SHEPPEY WATER) BILL [Lords].

Read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 140.]

WANTAGE URBAN DISTRICT COUNCIL BILL [Lords].

Read the First time; and referred to the Examiners of Petitions for Private Bills.

DURHAM COUNTY WATER BOARD BILL [Lords].

Read the First time; and referred to the Examiners of Petitions for Private Bills.

Orders of the Day — FINANCE BILL.

Further considered in Committee. [Progress, 11th June.]

[Captain BOURNE in the Chair.]

NEW CLAUSE.—(Amendment as to moneys payable under policies of life insurance effected for purposes of estate duty.)

If any person makes an insurance on his life, or on the life of any other person, with any insurance company legally established in the United Kingdom or in any British possession, or lawfully carrying on business in the United Kingdom, and the policy of insurance expressly states that such insurance is made with the primary object of providing for estate duty which may become payable on the death of the assured, and that so much as the holder of such policy or his legal personal representatives may direct of the capital sum payable thereunder will, on the death of the assured, be payable by the insurance company direct to the Commissioners of Inland Revenue for the purpose of being applied in or towards the payment of such estate duty then, to the extent to which such capital sum is so paid and applied, the same shall not be aggregated with any other property for the purpose of fixing the rate of estate duty, but shall form an estate by itself.—[Brigadïer-General Brown.]

Brought up, and read the First time.

3.34 p.m.

Brigadier-General CLIFTON BROWN: I beg to move, "That the Clause be read a Second time."
The object of the Clause is to lessen the rate of duty where an estate has been insured. At present if you want to insure against Death Duties, the value of the insurance is added in calculating the Death Duties, a most unfair burden as it seems to many of us, and this merely seeks, not to relieve the insurance from taxation altogether but only to tax it on its merits. I want to approach the subject from an agricultural point of view. It is always acknowledged that the Death Duties hit agricultural land even more than any other. I suppose it is the general desire of everyone that future generations should have a fair start free of debt. I suppose that everyone will agree that businesses should not be suddenly crippled by a large amount of capital being withdrawn, that workers dependent on the development of the land
should not be thrown suddenly out of a job, and that our countryside should not be impoverished and destroyed as is being done all over the country at present. The lightening of the burden of Death Duties on agricultural land has been approved by successive Chancellors of the Exchequer, including the Socialist Chancellor, but it is still a burden which must stop development and is injuring employment on the land to a far greater extent than is realised. Can we not find some way of insuring against these upheavals? We insure workmen against accident, against old age and against unemployment. Why can we not insure against the causes of unemployments It is, surely, worth considering, and it is in line with much of our legislation to-day.
The five years census of agricultural output just issued by the Ministry of Agriculture shows the state of affairs. It shows the estimated gross rental value, the estimated total capital value of the land and the estimated tenants' capital employed in the land, comparing 1931 with 1925, when the last census was taken. The total capital value of the land, which in 1925 was £815,000,000, is now £645,000,000, or a drop of 21 per cent. Rents were 13 per cent. lower in 1931 than in 1925. If we compare the total tenants' capital employed, we find that £365,000,000 has gone down to £280,000,000, or a drop of 23 per cent. If you add the drop in the capital value of the land, which is nearly all the owners' value, and the capital value of the tenants, it comes to £170,000,000. Is that a situation that we can go on contemplating with equanimity? Of that £170,000,000, we can only accuse the Death Duties of having taken £2,000,000 a year, or about £10,000,000 in the five years. The damage due to the decrease of £170,000,000 in the value of land is almost incalculable. What are people going to do to develop their estates? Is it worth while planting the hillside with trees, and spending money in building cottages and employing labour and so on? Is it worth while when money is given to other people instead of being spent on agriculture? Is not the old labourer, who for generations has been on an estate, in despair for fear the estate should suddenly have to be broken up? This is all the indirect effect of these Death Duties which we desire to minimise.
The suggestion in the Amendment is a very simple one. We should like to see something a great deal bigger. I know that the Chancellor of the Exchequer is very sympathetic towards it. Surely these figures show the effect of the heavy burden of Death Duties in respect of the Chancellor's annual Budget. If he wants to keep up his receipts from Income Tax he must be careful not to overdo it in the way of Death Duties. It has always been the pride of this country that our National Savings Certificates are so well supported by millions of people in this country. The creation of the desire for saving in the minds of the people is a great asset to the Chancellor of the Exchequer. It has been a very great asset in the troubles which we have had to face during the last three or four years. An enormous capital sum is invested in national savings. I desire the question to be looked into, as I think the principle should he supported. If you put away money for a particular object such as Death Duties, even if it is insurance like the National Health Insurance, it should be devoted to the object for which it was put away and not spent for other purposes. This is a sound principle in regard to insurance and national savings, and it would he equally sound for a person to be able to insure against Death Duties.

3.44 p.m.

Sir WILLIAM DAVISON: Personally I much prefer the Clause which was put down in the name of 34 other hon. Members and myself, but as that Clause was passed over, I desire to support the present Clause which is a step in the same direction. The Clause which we put down excluded altogether from Death Duties the amount covered under an insurance policy to pay those duties. This new Clause provides that the amount covered under an insurance policy to pay Death Duties should be treated as a separate estate and should not be aggregated with the main estate. We do not ask the Chancellor of the Exchequer to make the same allowances with regard to Income Tax in the case of the premium paid for these policies to pay Death Duties. The Clause contemplates a special insurance for a special purpose and for no other, and, if necessary, the insurance can be taken out in the name of the
Chancellor of the Exchequer. A person who insures against the payment of Death Duties now is doubly penalised. Not only has he to pay a large premium during his life, but on his death the amount of the insurance is added on to his estate, and not only has duty to he paid on the amount of the insurance in addition to the duty on the total of his estate, but very often the extra sum received from the insurance company towards paying the duty puts the estate in a higher category than would have been the case before. Consequently, practically no one takes out insurances of this kind. This is a point which makes it impossible for me to believe that it will cost the State anything if they accept the Amendment. If it had been the habit of people in this country to take out large insurances to pay Death Duties and the State had been accustomed to reap the additional duty on the insurance, it might perhaps have been said that it might involve the State in a loss. That has not been the case. People have not done it because of the penalties that would be inflicted upon them if they did so.
The object of the Clause is to encourage people to take out these insurances so that their estates shall not be broken up as they are to-day. Everybody agrees that it is inadvisable on the part of an individual to live on his capital, and what is true of the individual is equally true of the State, and yet we see week by week and month by month the State taking half, a quarter, or a third of the estate of a deceased person and using it very largely for the day-to-day expenditure of the State. Successive Chancellors of the Exchequer have admitted the evil of this, but nothing has been done. The Amendment on the Paper enables something to be done, for at no loss, or at any rate very trivial loss, to the Exchequer, these levies on capital can be replaced by an annual payment by the individual. My hon. and gallant Friend has dealt at length with the injury which these Death Duties have inflicted on landed property throughout the country. Farms have had to be sold to strangers and old farmers have often been turned out, and staffs generally reduced, thereby causing serious hardship.
While these duties are bad for all businesses and all trades, there is one particular industry which they more
seriously affect perhaps than anything else, with the exception of agriculture, and it is tramp shipping. If my hon. Friend the Financial Secretary to the Treasury will refer to his colleague at the Board of Trade, he will find that he will confirm every word of what I am about to say. There is nothing which has so seriously affected tramp shipping in this country, one of our greatest industries, than the Death Duties. It so happens that nearly all the tramp shipping in this country is held either by families or by individuals, and in the past it was their practice to build up reserves so that their fleets could be continually renewed, but, owing to the succession of Death Duties payable by themselves and their families, it has not been possible to accumulate these reserves. Although they have been seriously hit recently by subsidies given to foreign shipping they might have been able to meet this competition if they had been able to provide reserves for the building of new fleets, as they would have done but for the effect of Death Duties. If they had been able to set aside an annual sum out of their profits to meet Death Duties, the tramp shipping of this country would have been in a very different state to what it is to-day. All this could have been obviated by an annual payment to an insurance company.
I submit that insurance against Death Duties will be a benefit not only to the individual family but to the community and to the State. First of all, the Chancellor of the Exchequer would be paid at once on the death of the individual the whole sum from the insurance company without having to wait for years, as is often the case now. The Financial Secretary in refusing an Amendment yesterday said that it was one of the incidents of the system of taxation attaching to Death Duties that you had to fix the value of an estate at the moment of death, and that all sorts of hardships were occasioned because circumstances might occur after the death, as a result of which an estate which was valued at £2,000 at death might only realise £400 or £500 by the time the property came to be sold. That is another difficulty which would be obviated. The family benefits by not having a forced sale of shares, or bonds or business in order to find the Death Duties, and, thirdly, and most important, it would be for the
benefit of the community as a whole. I have often heard it suggested by hon. Members opposite that Death Duties are a matter which only concern the rich and the wealthy, and that they do not interest wage earners or the general public. This is a profound mistake, because actually while they are not a very serious hardship on the individual who succeeds to a large estate, he is probably a great deal better off than before, they are an incalculable hardship on a number of people who may be dismissed or who are in some way affected. [Interruption.] It is no use hon. Members objecting; it is a fact; it is an, incidence of this system of taxation.

The DEPUTY-CHAIRMAN (Captain Bourne): I think the hon. Member is travelling rather wide of the Clause.

Sir W. DAVISON: I am trying to show the desirability of the proposal to insure against Death Duty and the harm the present system of taxation creates. However, I will pass from that. My point is that Death Duties are eating into the capital reserves of the State and the State being only the sum total of individuals who compose it, it means that the total capital of the nation is being used up. From the year 1925–26 to 1932–33 no less than £600,000,000 was paid in Death Duties, and during the same period, and largely by the same parties, £2,600,000,000 was paid in Income Tax and Surtax. I suppose the Financial Secretary will tell us again that while he sympathises with the proposal he regrets that he is unable to accept it because it will involve the State in a loss. I hope he will clearly explain how that will be brought about; it has not been explained. If people had been in the habit of taking out this insurance I could understand the State being involved in a loss, but as they have not been doing so I cannot see how it does. It may be said that the Government cannot differentiate between one kind of saving and another, but this is not a saving in the sense that it benefits the family, it is to keep the estate in the same level and not have it broken up. In April of last year a writer in the "Times" put in a startling way the bare effect of these Death Duties. He pointed out that 13 large estates had recently been admitted to probate, the Death Duties on which amounted to £23,500,000.

Colonel CLIFTON BROWN: On a point of Order, may I ask whether it is in order now to discuss the whole effect of Death Duties on a new Clause in Committee stage or whether we are discussing whether insurance should be included in the estate?

The DEPUTY-CHAIRMAN: I was at the moment about to rise to point out to the hon. Member for South Kensington (Sir W. Davison) that we cannot discuss the whole policy of Death Duties. I think he is entitled to argue that it is a good thing to insure against them, and that the new Clause facilitates it, but that is as far as we can go.

Sir W. DAVISON: I have made my point, to show how desirable it was that these estates should have been covered by insurance, because then the £23,000,000 would not have been paid out. That is my point. It would have been much better for the State if these large estates had been insured and kept intact, as they would then have continued to pay tax on an annual income of £1,175,000. It is the same thing as in the case of an individual, who might spend £23,000,000 in three or four years and sacrifice £1,175,000 a year. You would call such a person a spendthrift. I am asking the State to behave in the same way as we expect any reasonable individual to behave. If we take a long view there is no class more interested in seeing that Death Duties are insured against than those who make a special claim to look after those who receive benefit from our social services. If you continually reduce these estates——

The DEPUTY-CHAIRMAN: The hon. Member is again going outside the Clause.

Sir W. DAVISON: It is a little difficult to keep strictly to the Clause, but as I have made my case fairly clear I will be content. From the point of view of those concerned with maintaining our social services it is clearly advantageous for those services as well as in the best interests of the State to pass such a Clause as this, which will enable those who have to pay Death Duties to insure against them and so avoid the breaking-up of their estates.

3.59 p.m.

Captain JAMES LOCKWOOD: I should like to explain to the Committee
the reasons why we are moving the new Clause. I support it for several practical reasons. I have followed the profession of a solicitor, and have had to deal with the difficulties of estates where they consist not of liquid assets but of a variety of forms of property, and it is undoubted that the necessity for some such provision as this increases with every increase in the rate of Death Duties. In years gone by it was not a serious matter that an estate should have to meet the withdrawal of a portion of its liquid assets, but, as every year goes by and Death Duties increase, the rate is so great that there is hardly any estate left by a person engaged in agriculture or in business which is so situated on the death of the person that it can with safety to the estate and to the State meet a withdrawal of the liquid funds necessary for the payment of Death Duty.
In the assessment of Death Duties the range of the duties, of course, increases with the value of the estate, but there are provisions whereby certain portions of the estate are not aggregated with the main estate. In other words, if you can separate such portions of the estate from the main body of the estate, you do not thereby increase the rate of duty upon them. If an estate consists of mills, machinery, real estate and property of that kind, in order to make it possible to carry it on, it has to have a certain amount of liquid money. I think that the Committee will see that such a state of affairs must exist in every estate where a person is engaged in business operations, and the same would apply if he were engaged in agriculture. What happen when such a person dies? Immediately there is withdrawn the pillar of support from the estate or business, and, in addition, you withdraw from the estate a tremendous amount, proportionately, of the liquid assets which are necessary to keep the estate going.
I would like hon. Members opposite particularly to notice this, because when a previous speaker was explaining, they seemed rather to dissent from the fact that such a state of affairs could have any hardship upon those connected with an estate. In a business such as I have outlined, in addition to the withdrawal of the pillar of the business through death, there is the withdrawal of a huge amount of liquid cash. Death Duties must always be paid, and, as a rule, when
probate is applied for, almost before anyone can handle the estate, sell any portion of the estate or deal with the property Death Duties have to be paid to the Treasury. In the case which I have outlined you get an immediate draft upon the business. In many cases in recent years practically the whole life blood of the business has been withdrawn to meet Death Duties, and in such cases the unfortunate executors and others who have to handle these matters are left with a business or an estate which is denuded of its liquid resources. Difficulties immediately arise; applications have to be made for loans to bankers and others; and payments have to be made to widows, beneficiaries and other persons. Immediately their difficulties arise, and in recent years the heaviness of these duties and the way in which they fall, as I have endeavoured to illustrate to the Committee, have been so serious that business after business has bad to be closed down.
Further, the committee should notice that when the liquid moneys and the life blood of the business are withdrawn in this manner, the remaining assets, which may have had a value coupled with the life blood of the business, immediately become worthless, and, therefore, you get a catastrophe so far as the continuation of business is concerned. I happen to have had a very large experience of this difficulty in the West Riding of Yorkshire, and the position is getting so serious that unless the Treasury are prepared to do something in the nature asked for in this Clause, the conduct of business by private ownership or small companies will be impossible. I cannot go into the other side of the picture as to what would take its place, but that is sufficient for us to consider.
What are we asking in this Amendment to help us out of that great difficulty? I want hon. Members opposite to notice that we are not asking to be put in pocket in any direction, or that an estate should receive any concession in the nature of a gift. We are simply asking that if a person, who knows that there is going to be such a difficulty on his back, and he is a prudent person, he shall have the right to create, in the form of an insurance policy, a sinking fund to provide the liquid cash to meet an immediate obligation on death. I have
had such an Amendment in my mind, and brought it to the notice of the Treasury ever since I came to the House, for the reason that the seriousness of it has been so apparent to me. I do hope that the Financial Secretary will not say this afternoon that this is going to cost the Government so much, because I have explained that it cannot on the present basis cost the Government anything. It will apply to policies of insurance after this date, and every new policy will be an addition to the estate as it exists to-day. Therefore, there will be an incentive for persons to take out these policies and, in so far as they do take out the policies, there will be an addition to the estate and an additional duty payable on the amount of the policies. To that extent the Treasury will benefit. The Inland Revenue Department have had before them in recent years sufficient illustration of the terrible disasters which have resulted to businesses and to estates by the immediate payment of these moneys, and if they can help to maintain estates, if, at the expense of the individual owner, they can do anything to mitigate this evil, they ought to do it.
I do not think there is any gentleman engaged in the legal profession or any Member of this House who has experience of the untoward events that may happen, and often do happen, on the death of a person who will be other than in sympathy with this modest proposal. I, myself, would have liked the Treasury to have admitted that the proceeds of any such policies should not be assessable for duty at all. Of course, there may have been an objection to that, but if they do accept this Clause, the Treasury know that any policy so taken out will have to bear some duty. Even small estates nowadays pay a considerable percentage—as much as 10 per cent.—and as the estate gets larger it pays a greater proportion; but if a policy could be taken up for, say, £5,000, even such an amount would pay a considerable duty, and it would encourage the establishment, so to speak, of an inner reserve in every estate to meet this difficulty. The continuation of business and employment would be made far more certain, the maintenance of the level of value of public stocks and shares would be maintained, and the position of the Inland Revenue would be
made far easier in the collection of these heavy duties. I beg to support the Clause.

4.10 p.m.

Mr. RADFORD: I am very reluctant to oppose my hon. Friends on this new Clause which they have proposed so eloquently. Nevertheless, I feel that its acceptance by the Government would involve an unjustifiable differentiation in the treatment of different testators' estates, where a life policy was taken out in one case or investments accumulated for the purpose of defraying these duties in another case. After all, there are two distinct ways in which a testator should make provision for the Death Duties which he reluctantly anticipates will be paid in a certain event. Having made as nearly as he can some estimate of what duties will be payable on his decease, he should adopt one of the following courses. He should either set aside out of his income every year the requisite amount of money which he may either accumulate on deposit at the bank or invest; or, alternatively, he may take out a life insurance policy payable at death for an amount sufficient to cover the estimated amount of the duties. The life insurance company, assuming the normal expectation of life, accept premiums which they, in turn, invest and accumulate and out of which they have to make profit; so that if a testator in setting aside annual sums invests that money to as great advantage as the insurance company can invest it, he will accumulate as much money, assuming the expectation of life is fulfilled, as the amount payable under an insurance policy.

Brigadier-General BROWN: People will not do that, because it simply increases their Death Duties.

Mr. RADFORD: Perhaps my hon. and and gallant Friend will allow me to finish what I was saying, and I will then deal with that point. I think it is perfectly clear that the Committee could not possibly approve a position where of two men of identical -wealth, one decides to make provision by means of annual allocations of income to provide at compound interest for the duties payable, and the other one prefers to pay an equal amount to an insurance company as an
annual premium, and when death supervenes the Death Duties should be more in the case of one estate than in the other, when both are leaving an equal amount of money. I am sure that the Committee would not approve of that.
In reply to the point just raised by my hon. and gallant Friend, if the Government, say, on the Report stage, would accept an Amendment or new Clause somewhat on the lines of this one, but giving the same rights irrespective of the nature of the provision which a testator had made for the payment of the Death Duties, I would be entirely with my hon. and gallant Friend, but not as long as that privilege is only to attach to a testator who has taken out a life insurance policy for that purpose. In the absence of some such pronouncement by the Government I am sorry I cannot support the proposed new Clause.

4.15 p.m.

Mr. SPENS: The last speech was extremely interesting but it did not tackle the problem which we have in mind. What we have in mind is not the case of the wealthy man who manages to make large savings in the course of his life. The man we have in mind is the lower middle-class man striving to make a living out of a small business and to provide for his wife and family in the event of his death. The sort of thing which such a man is generally able to do is to purchase a home for his widow and perhaps a small annuity, but he does not realise that on his death she will have to pay Death Duties on the estate—both on the value of her home and on the value of the annuity—that she will probably have nothing whatever out of which to pay those duties and she may have to sell out her home in order to provide the money. On the other hand, it is true that a considerable number of people in this country have the sense to insure against Death Duties.
When people come to take the advice of a lawyer on the matter, they have to be told that they must insure not only for the amount which they think at the moment will cover Death Duties on the estate but for a larger amount. They have to be reminded that the insurance monies will be aggregated with the estate and if the existing value of that estate is on the borderline of one of the graduated stages, then, up will go the rate of duty. Consequently they must
insure for a much larger sum than at first appears necessary because they will be called on to pay duty at the higher rate. When they are told all this a large number of them conclude that it is not worth while insuring at all. They take the risk; they do not insure, and the consequences in connection with many of these small estates are such as have been described to the Committee.
There is no doubt, however, that a certain number of people insure today for very large sums, that these insurances are aggregated with the estates, and that the Government get the full amount of duty on the larger sum. If a provision such as this were inserted in the Finance Bill it would encourage a great number of less well-off people to insure. They would be encouraged to do so because it would then cost them less and the result would not be so expensive to the estate. The practical question for the Government is what would they lose. No one can tell until it has been tried, but we submit that everybody in moderate circumstances ought to be encouraged to insure against these duties, for the sake of their own estates, for the sake of the revenue and for the sake of the country. If that encouragement were given, I believe there would be a great increase in these insurances which would prevent an enormous amount of misery to the people immediately concerned and would be, we believe, for the benefit of the State.

4.20 p.m.

Sir FRANCIS ACLAND: I have listened to this Debate with some interest and sympathy. It has not been exactly a personal sympathy because I have never been able to contemplate insuring against Death Duties. The ordinary owner of agricultural land cannot possibly presume to indulge in luxuries of that kind. But I ask the Committee to realise that a very big principle is suggested here and that very large sums would be involved if that principle were adopted. We all know how these duties work and how steeply the rate of duty rises according to the amount of the estate. We know that in the case of very big estates a large proportion is taken in duty. We all know, therefore, that if an estate, on the occasion of a death, were divided into two parts, namely, the part which has been set aside to pay Death Duties and
the part which had not been so set aside, and, if those were treated as two separate estates, the amount which the Treasury would lose because of the lower rate of duty applicable to those two estates would be considerable.
We ought to realise, too, that the amount which would be lost by the Exchequer and gained by the individual would be greater, the larger the total estate. The effect of having the estate divided and treated as two separate estates is, indeed, hardly a relief at all to the smaller man but it is an enormous relief to men who leave large fortunes. There is the case of the man who leaves £3,000,000 or £4,000,000. Such cases have occurred recently. On such an estate, £1,000,000 or so might be payable in Death Duties. But if an estate of that kind is to be treated as two estates as a result of insurance against Death Duties, the owner of that estate will promptly take that step, as a sensible man, and the estate of £4,000,000 will be treated as two estates, one of £3,000,000 and the other of £1,000,000 and the loss to the Exchequer will be considerable. A very large principle is involved in this proposal and that ought to be clear to the Committee, before they decide, as well as the relief to the lower middle-class person whose case has been advocated.

4.23 p.m.

Mr. MICHAEL BEAUMONT: I had not meant to intervene in this discussion, but the speech of the right hon. Gentleman the Member for North Cornwall (Sir F. Acland) calls for some comment. In the first place, I consider that his fears as to loss of revenue in the case of large estates are exaggerated. When a certain figure has been reached in the size of an estate there would be no loss to the revenue except in respect of what was directly due to insurance. There would be no loss on the remainder of the estate because it would still be at the highest possible figure which the duty can reach. But the real case against the right hon. Baronet was given by himself in his opening remarks when he said that, as an ordinary agricultural landowner, he had never been able to contemplate insurance against Death Duties. I do not believe that, in practice, the larger estates would get much benefit from this proposal because I do not believe that they could afford the
enormous premiums which would be necessary for the required insurance. There might be individual cases, but I do not think they would be numerous. The kind of case that we have in mind in this proposal has been very clearly stated by previous speakers. It is the case of the man who is being charged duty on something which is not realisable at the value at which it is assessed. We believe that there should be some opportunity to guard against that eventuality.
Hon. Members opposite would probably say that if these estates were broken up it would be a very good thing and that if people were turned out of employment in consequence, it would be a necessary evil. We do not take that view. We believe that these estates should be kept together and in good working order in readiness for the time when the hon. and learned Member for East Bristol (Sir S. Cripps) is to take them over. We would hate to hand them over to him in anything other than a sound working condition, and therefore we wish to preserve them. I do not know whether this Clause as worded can be accepted or not, but we believe that something of this sort ought to be done in order to allow for the continuance of businesses and estates on which many people depend and in order to enable those concerned to take a prudent step and to pay these Duties without being penalised.

4.24 p.m.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): This discussion has afforded an opportunity to some of my hon. Friends to express their views upon the Death Duties generally and I shall say nothing which would suggest that the incidence of those duties is not a considerable burden. This new Clause is apparently devised for the purpose of minimising that burden and I am concerned rather with the purely practical aspect of the matter and with what would happen under the Clause if it were in operation. I think the Committee are aware by this time of what would happen in those circumstances. The proposal is that insurance monies, in so far as they are used to pay Estate Duty, shall not be aggregated with the whole estate, in other words that there shall
be two estates. As these duties are graduated and are on an ascending scale in relation to the size of the estate—the larger the estate the higher the rate of duty—it is plain that if an estate were divided into two parts the duty on each separate part would be at a lower rate than the duty on the two parts together treated as one estate.

Sir W. DAVISON: If the whole estate were £2,000,000, duty would be paid on £2,000,000, but if the man owning the estate had insured for £1,000,000 extra, in order to pay that duty, he would not have his estate valued at £3,000,000. He would only pay on the £2,000,000—that is all.

Mr. HORE-BELISHA: I think there is some slight confusion in connection with this matter. Let me give my hon. Friend an instance which will make it plain to him. Take an estate of £1,050,000 which is liable at present to a rate of 40 per cent. giving a charge of duty of £420,000. That is what the Exchequer now receives. If that estate included £355,000 policy money the charge of duty under this new Clause would be on two separate estates, one of £695,000 at 36 per cent. and the other of £355,000 at 30 per cent. giving a duty of approximately £355,000 instead of £420,000 as at present. I hope that case will make it plain to my hon. Friend that the revenue would lose by this method of separating one single estate into two estates.

Mr. DAVID REID: Would the hon. Gentleman kindly give the Committee the details of the calculation? At first sight, it is difficult to see how a person, out of that income, could pay premiums to that amount.

Mr. HORE-BELISHA: In order to say what happens in regard to any particular estate of course one would require to have the figures of the actual estate. I am giving one example and the hon. Member may take any other example. When we come to the case of estates of tremendous size of course the proposed new Clause would have no effect at all. Take the case of an estate of £10,000,000 If that estate included £2,250,000 of policy money, the duty would be 50 per cent. on the whole estate but the two separate estates of £7,750,000 and £2,250,000 would each be liable to duty at the rate of 50 per cent. Thus when
we reach the very big estates, as has been pointed out, the Clause would have no value at all. In the case of estates below that level the Exchequer would lose every time. It is not a fact, as has been suggested, that these policy moneys are an addition to the estate which would not otherwise have been there. The size of the estate is exactly the same. A man can invest money in insurance or in War Loan or in property. [HON. MEMBERS: "Or spend it!"] It is always possible to avoid Death Duty altogether by spending all one's resources.

Sir W. DAVISON: They do.

Mr. HORE-BELISHA: I am dealing with the estate as it now stands, and I think it must be plain to the Committee that by abandoning the principle of aggregation the Revenue would lose. I am in a position to inform my hon. Friends that, if full advantage were taken of this Clause, the loss to the Exchequer would be in the neighbourhood of £20,000,000. That is the closest estimate I can form.

Sir W. DAVISON: Assuming that it is insured now?

Mr. HORE-BELISHA: I said "if full advantage were taken of this Clause" and the results that my hon. Friends think desirable were achieved, namely, that persons were insured to the full amount of the duty. If they were in sured for less, the loss to the Exchequer would be less, but in any event it would be considerable.

Lieut.-Colonel Sir MERVYN MAN-NINGHAM-BULLER: Has the hon. Gentleman taken account of the number of insurances which are not taken up? If all these insurances were taken up, the Exchequer would get a certain sum of money from the lower rate of Death Duties.

Mr. HORE-BELISHA: The more persons availed themselves of the Clause and the more they covered their Death Duties by insurance the more we should lose, and we should lose not only on Death Duties, but on Income Tax as well, because a special allowance is made for moneys paid by way of insurance. I do not think there is any escape from the deductions which I have drawn. I have the fullest sympathy with the case put forward by my hon. Friends, but really the general complaint about Death Duties has nothing whatever to do with this
Clause, which is a specific proposal, open, as I say, from the Revenue point of view, to the gravest objections. Let us all hope that the time will come when it will no longer be necessary to raise so much revenue from this source.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Amendment of 57 and 58 Vic., c. 30, s. 4, as to aggregation.)

In addition to any property excluded from aggregation by section four of the Finance Act, 1894, as amended by sub-section (1) of section twelve of the Finance Act, 1900, section fourteen of the Finance Act, 1914, and section fifty-one of the Finance Act, 1927, all property passing or deemed to pass on the death of a person dying after the commencement of this Act, under a disposition not made by the deceased to some person other than the wife or husband, or a lineal ancestor or lineal descendant of the deceased, shall not be aggregated with property of the deceased for the purpose of determining the rate of estate duty.—[Mr. M. Beaumont.]

Brought up, and read the First time.

4.33 p.m.

Mr. M. BEAUMONT: I beg to move,
That the Clause be read a Second time.
It is a matter of great regret to me, and, I expect, of even greater regret to the Committee, that the hon. and learned Member for Bridgwater (Mr. Croom-Johnson), whose name is attached to this Clause, is not here to assist us, and that the Noble Lord the Member for Horsham (Earl Winterton), whose name also is attached to the Clause, has only just arrived and is not in a position to open the case for it. It is a matter of some importance and of some legal technicality, and I hope that neither the Committee nor the Financial Secretary to the Treasury will allow it to suffer from inadequate advocacy on my part. In effect, the object of the Clause is to restore the position with regard to the aggregation of property to what it was under the Finance Act of 1894, namely, that there is an exemption with regard to property passing under a disposition, not made by the deceased to some person other than the wife or husband, or a lineal ancestor or lineal descendant of the deceased. As far as I understand it, it means that, provided there is an outside settlement, which has nothing to do with a will, on some person who is neither the immediate predecessor nor the descendant of the deceased, that money, if it ever
comes in, should only be charged Death Duty at its normal rate, and should not be affected by the money in the rest of the estate; in other words, that you do not pay duty on something that you do not get.
The case of hardship under the present law is as follows: "A," the tenant for life of an agricultural estate of considerable size charged in 1871 part of this estate with a portion for a younger son, "B," in the form of a rent charge of £9,700 per annum. "B" died in 1933, when £8,200 per annum of the rent charge reverted to "C," the present owner of the settled estates on which it was charged. By reason of aggregation of the principal value of the rent charge of £8,200, "B's" free and other settled estates which pass to his daughter bear an increased rate of at least 5 per cent., or a sum of about £5,000. That, if I understand it correctly, means that in this particular case a man has had to pay an extra £5,000 out of his own pocket, not out of money that has come to him because he has inherited that property, in addition to the duty that he will have to pay on the money that he has inherited. Our contention is that that is in fact paying the duty twice over. I could give the Committee other examples of the hardship involved. There is one, which was given me by the Noble Lord, of a man who had to pay a matter of £900 additional Death Duty for a £200 benefit. The circumstances were peculiar, but it is a perfectly well authenticated case.
The Finance Act of 1894, which, as the Committee will remember, was the first in which the principle of the payment of Death Duties was introduced—a bad day, I venture to think, for the country—had a provision similar to the one which we are now proposing. This was repealed in 1900, and there was substituted a provision that such aggregation should not cause a higher rate of duty than an extra half per cent. That was abolished, for a reason that I have never been able to ascertain, but I have a shrewd suspicion that it was done without realising the consequences, in 1927. Considerable hardship has, as I have said, already been shown under the present system of aggregation. If I am correctly informed—and I speak on this matter subject to correction—the loss to the
revenue by the adoption of this proposal would be infinitesimal. I think it is a genuine grievance, and I hope very much that the Minister will see his way either to remedy it now by the acceptance of this Clause, or, if not, to give it his attention and find some suitable words to remedy the grievance, which we believe to be a very real one.

4.40 p.m.

Earl WINTERTON: In the course of a long Parliamentary career, I have never spoken before on the question of Death Duties, but, frankly, I am partly responsible for this Clause having been put forward, because of a case which occurred to me. I hesitate to bring it before the Committee. I make no complaint and have no grievance, but the case is so inequitable that I think it should be mentioned. I was asked by a very prominent member of the Law Society, who asked that his name should be kept out of the Debate, to move this Clause, and a number of other solicitors, including many family solicitors who look after the interests of clients who have large estates, were associated with him in asking me to move it. We appreciate that it may not be possible for the Chancellor of the Exchequer to accept it on this occasion, but we hope that the arguments which we put forward, and which I regret are not supplemented by the arguments of my hon. and learned Friend the Member for Bridgwater (Mr. Croom-Johnson), who has had great experience of these cases in a professional capacity, as he is not here to put them forward. We believe that if the change which we suggest—and which I may tell my right hon. Friend has been carefully drafted by the best Parliamentary draftsmen available to a private Member, after consultation with a large number of authorities, not only solicitors, but one or two barristers—were made, the actual detrimental effect from a Revenue point of view would be very small, but it would carry out what we conceive to have been the original intention of Parliament when it dealt wtih Death Duties.
This is not the occasion on which to deal with the whole question of aggregation, and we do not deal with it here. We deal with only one aspect of the problem. My hon. Friend has already given one case of the hardship which arises under the present law, and I would like to give, very shortly, the case in
which I was interested. Some time ago a relative of mine died. Under the will of my grandfather, during that relative's lifetime I had to pay him a sum of £200 per annum. Incidentally, though it does not affect the point, I purchased a Government annuity some 10 years ago, and therefore no longer had to bear the actual burden at the time of his death. The value of the annuity, which prima facie ceased, was calculated on a 4½ per cent. basis and agreed with the Inland [Revenue at £4,210 10s. 6d. That value by itself would have attracted Estate Duties at 3 per cent., but by virtue of its being aggregated with the deceased's estate, which did not interest me in the slightest degree—I did not get a penny out of it—it was valued at no less than £23,679, or rather, owing to the deceased's estate being of that amount, the rate of duty was increased from 3 per cent. to 10 per cent., and £421 Estate Duty was thereupon paid—that is to say, almost double what I should have had to pay had the estate been by itself.
But that is not the end of the story. On the 14th January of last year, a further claim for additional Estate Duty was received from the Inland Revenue, on the ground that it had been discovered, with regret, that it would be found necessary to disturb the assessment of 10 per cent., other equitable property having been found to pass under the deceased's will. Again, it did not effect me in the slightest degree. I instructed my solicitor to write back to Somerset House and point out to those always charming and friendly people, that it was regrettable to have to pay this extra amount, as they had already given me a receipt for the amount of Death Duty. With the courtesy which always distinguishes them, they wrote back to say that when one of the Departments of His Majesty's Government gave a receipt, it did not necessarily mean that the subject did not have to pay more money. The result was that the rate of duty was increased from the previous 10 per cent. to 20 per cent., by reason of the value of the further equitable property. I therefore had to pay nearly £900, instead of what I venture to state would have been the true payment of £200 on the value of the estate itself.
I have known of even worse cases. I have not got all the details, so I will not attempt to give them, but I was told the other day of the case of a person who
was left £15,000. It was a poor woman, who had very few other means, and who had been expecting this money, which came from a distant relative, for some years, as the relative was very old, but when the relative died, so far from getting £15,000, the whole of it went in Death Duties, owing to the rest of the estate being a very large estate. I showed my own case to a solicitor friend, and he said, "It is a bad case, but not nearly as bad as some that I could give." I realise that we are working to a time schedule, and I do not want to keep the Committee too long, but I would ask my right hon. Friend to give the most careful consideration to this proposal. We do not wish to press the Clause at this stage, but we ask that he should give serious attention to the question of aggregation. It is not right that on the death of a person there should be imposed a burden of this kind, which is inequitable in itself. I am the last person to suggest that the whole principle of Death Duties is wrong; I do not think it is, and I do not mind a high rate of Death Duty, but I do say that aggregation as it now stands is not an equitable principle. I commend the matter to the sympathetic attention of my right hon. Friend.

4.46 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): The case which my Noble Friend has put, with good humour, is a complaint against the aggregation of property in relation to Estate Duty. While I am not called upon to make a defence of Estate Duty or of the principle of aggregation, I should like to explain the theory. The theory is that this is a duty which is leviable upon property as such, without any regard to any beneficiaries of the property. While the case of a beneficiary who is going to receive or has received much less than he would have expected may seem a very hard one—and certainly Members of the Committee will sympathise with my Noble Friend—to give way on that point would be to contradict this fundamental and essential principle of the Estate Duty. When this duty was first imposed it had a provision in it very similar to that which has been described by my Noble Friend. It gave rise to a great deal of criticism at the time, and it was investigated by a very strong committee,
consisting of Lord Finlay, Sir R. J. Reid, Lord Haldane, Mr. Pretyman and by Sir Henry Primrose. I should like to quote what that Committee said on this point:
We must observe that the Act as it stands contains an important modification of its fundamental principle that all property passing on death, whether settled or not settled, should be aggregated to form one estate. By the proviso to Section 4 it is enacted that property passing on the death of the deceased, in which he never had an interest, or which passes under a disposition not made by him to some person other than the wife or husband or persons lineally connected with the deceased, shall be treated as an estate by itself, for the purpose of determining the rate of duty. This provision was designed to protect the family of the deceased from having to pay on the property passing to them at a rate enhanced by the fact that other property passes on the death of the deceased to persons outside the family.
That is exactly the case put by my Noble Friend. They proceeded to say:
No exception can be taken to the provision for exempting from aggregation property passing on the death of the deceased in which he never had an interest. But the rest of the proviso is so worded as to result in conferring on collaterals or strangers, who take under a disposition not made by the deceased, an exemption from aggregation of this property with the other property of the deceased, quite irrespective of the destination of such other property, or of the existence of any persons such as the proviso was designed to protect. Moreover the proviso presents great practical difficulties in administration, and it introduces considerations of the ultimate destination of property passing on the death of the deceased and of the degree of consanguinity of beneficiaries to him, considerations which are quite foreign to the main principles of the Act.
Accordingly, they recommended that the first thing to do was to repeal the proviso, re-enacting that part of it which exempts from aggregation property in which the deceased never had an interest. That was done, and that is the law to-day and it is in consequence of that recommendation by that strong committee, enacted in 1900, that my Noble Friend has suffered the hardship of which he complains. Seeing that the Amendment would affect this fundamental principle of the Estate Duty, namely, the principle of aggregation, I cannot accept it. So far from the acceptance of the Amendment meaning a trifling expense, I am informed that it would cost me £2,000,000 in a full year.

Mr. M. BEAUMONT: In view of the statement of the Chancellor of the Exchequer, I beg to ask leave to withdraw the Motion. As we have already stated, we do not wish to press the matter now. It would seem from the statement made by the Chancellor of the Exchequer that we shall have to attack the whole principle of aggregation at a later date.

Motion and Clause, by leave, withdrawn.

The DEPUTY-CHAIRMAN: The next proposed new Clause—(Repeal of lax on mutual profit)—is out of Order, because in certain circumstances it would impose a charge.

4.51 p.m.

Mr. LEONARD: This new Clause, which stands in my name and in the names of several of my hon. Friends, has been looked upon as of great importance. I do not want to go against your Ruling, but it appears to me that the new Clause is simply a proposal to return to the status quo.

The DEPUTY-CHAIRMAN: I am afraid that the hon. Member has overlooked one effect of the new Clause. The result of Section 31 of the Finance Act, 1933, was to bring the various industrial and provident societies within the ambit of the relief granted by Section 34 of the Income Tax Act, 1918, and in certain cases they are able to claim relief. The effect of the Clause is to abolish that power of claiming relief.

Mr. LEONARD: I thank you very much.

NEW CLAUSE.—(Amendment of law as to redemption of land tax.)

So much of section sixty-four (Amendment of law as to redemption of land tax) of the Finance Act, 1921, as relates to the rate per centum per annum of the interest to be paid under section thirty-two of the Finance Act, 1896, on unpaid instalments of the capital sum due from the owner of any land to the Commissioners of Inland Revenue for the purpose of the redemption of land tax charged on that land shall from the commencement of this Act cease to have effect and as from such commencement the said rate shall be three per centum.—[Brigadier-General Clifton Brown.]

Brought up, and read the First time.

4.53 p.m.

Brigadier-General BROWN: I beg to move, "That the Clause be read a Second time."
Up to the Finance Act of 1921 the amount of interest on money borrowed to redeem land tax was 3 per cent. In the Finance Act, 1921, the interest was raised to 4 per cent., at which rate it stood in the Finance Act of 1896. This new Clause simply seeks to put the rate of interest back where it was in 1896. I need not enter into the question of land tax, but I would ask the Chancellor of the Exchequer to consider what he said last year to the hon. Member for Kettering (Mr. Eastwood) with regard to a scheme of redemption for the whole of the land tax, which is a very worrying business. It seems to us now that the Conversion Loans, etc., have been brought to a rate of interest from 5 per cent. to 3½ per cent., that loans in respect of money borrowed to redeem land tax should be reduced just as other loan rates have been reduced.

4.54 p.m.

Mr. CHAMBERLAIN: My hon. and gallant Friend in mentioning that the rate of interest was increased in 1921 from 3 per cent. to 4 per cent., omitted to observe that the consideration, which was then 30 years' purchase, was reduced to 25 years' purchase.

Brigadier-General BROWN: I had noticed it, but I did not mention it.

Mr. CHAMBERLAIN: I do not observe that in his proposal to restore the rate of interest to 3 per cent. the hon. and gallant Member proposes to restore the number of years purchase from 25 years to 30 years. If he will consider the two things together I might meet him. Otherwise, this is not a matter for legislation. Inasmuch as the total amount paid in interest on instalments is only about £400 a year and the saving of interest would only be £100 a year, it does not seem worth while to bring forward such an Amendment.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Amendment of rules applicable to Schedule E.)

The rules applicable to Schedule E set forth in the First Schedule to the Income Tax Act, 1918, shall be amended as follows:—
In paragraph (1) of Rule 11, the word 'the,' after the words 'deducted out of,' and the word 'that,' after the words 'on account of,' shall be deleted.

In Rule 15 the words 'any sums, the deduction shall be made at such times in each year as the said sums are payable' shall be deleted, and the following words shall be substituted: 'official pay, the deductions for any Income Tax year ending the fifth day of April shall be made at such times as the official pay is payable during the year ending the thirtieth day of June following:

Provided that, as respects the tax for the current Income Tax year, the deductions for the Income Tax year ending the fifth day of April, nineteen hundred and thirty-five, shall be made at such times as the official pay is payable during the periods beginning the first day of April, nineteen hundred and thirty-four, to the 'thirtieth day of June, nineteen hundred and thirty-five.
Provided that the foregoing Amendments shall not apply—

(a) in the case of leave salary chargeable under Schedule E falling within Section seventeen of the Finance Act, 1923; or
(b) in the case of any office or employment held or exercised occasionally or intermittently in the United Kingdom by a person who is not continuously resident there.—[Mr. Wilmot.]

Brought up and read the First time.

4.56 p.m.

Mr. WILMOT: I beg to move, "That the Clause be read a Second time."
I should like to explain that the Rules referred to are the Rules governing the payment of Income Tax by civil servants. The intention of the Clause is to do something to remedy a grievance which civil servants feel presses somewhat hardly upon them. The effect of the proposal is in no sense to give to civil servants any advantage over other Income Tax payers. As at present framed the law places civil servants at a very distinct disadvantage as compared with non-civil servants, members of the general public, in regard to the method and the time of their Income Tax payments. Not only do civil servants, where the rate of their remuneration requires them to do so, pay Income Tax on the same basis of assessment as other taxpayers, but their payments are deducted at the source each quarter by the Department under which they are employed. That is a very considerable advantage from the point of view of the Exchequer, inasmuch as there is no delay in making payment of Income Tax by civil servants, as sometimes, unfortunately, is the case by members of the general public. It would be fair to say
that the periodical deduction at the source has also the advantage from the point of view of the Exchequer in that there is no necessity to press a reluctant taxpayer, possibly through the courts. There is the advantage also in that the interest on the tax payments amount to a considerable sum in the aggregate to the Exchequer by reason of the prepayment.
But that is not the grievance to which I would refer. The grievance is that civil servants are compelled to pay their Income Tax more promptly than other people. They have to pay a considerable period before the ordinary taxpayer is required to pay. It works out in this way, that the ordinary taxpayer does not pay anything in respect of tax payable during the financial year until 1st January in the Income Tax year, which ends on the 5th April. On 1st January half the amount due for the current becomes payable, but so far as the civil servant is concerned by the 1st January he has already paid three-fourths of his tax, and he pays the other quarter on. 1st April following, having therefore completed the full 100 per cent. of his payments before the end of the financial year, that is to say, before the 5th April. The ordinary taxpayer having become liable for 50 per cent. of his tax on 1st January does not become liable for the further 50 per cent. until 1st July. That is to say, his 100 per cent. tax does not become due until a considerable time after the close of the financial year. For a short period after 1931 the Chancellor of the Exchequer obtained approval for the payment by the ordinary taxpayers of 75 per cent. of their contributions within the financial year, instead of the normal 50 per cent., but in the 1933 Budget the Chancellor of the Exchequer provided for a reversion to the present normal system under which the ordinary taxpayer pays only 50 per cent. during the financial year. This undoubtedly gave relief to the ordinary taxpayer in that it deferred his payment of one-quarter of his Income Tax for that period; and the effect of the Clause is to provide that in the case of a civil servant there shall for this year, and for this year only, be a deferment of one-quarter of the tax payable, in order to do something to bring him into line with the ordinary tax-
payer. This will place the civil servant and the ordinary taxpayer on an equality in regard to the difference of a quarter's tax. But it still leaves the civil servant under the strictest possible obligation, by deduction of the tax at the source, to pay three-quarters of his tax during the relevant financial year, while the ordinary taxpayer will still pay only the 50 per cent. So the effect will be that the civil servant will still be worse off. But I am pressing only that 25 per cent. of the difference, on the lines which I have indicated, should be adjusted.
I want to make it quite clear that in regard both to the ordinary taxpayer and the civil servant over a period of years there is, of course, no difference, because both pay the full tax. To put it briefly, the effect of the new Clause will be to provide that while the ordinary taxpayer will pay 50 per cent. of last year's and 50 per cent. of the current year's tax, the civil servant will in future pay 25 per cent. of last year's and 75 per cent. of this year's tax. It is somewhat technical and difficult to explain without pencil and paper, but I think the Committee will appreciate that the present system is a real hardship on the civil servant, and a hardship for which there is no justification. We are not asking for any change in the method of payment in advance, by deduction at the source, but we are asking that payment shall be deferred for one quarter in order that civil servants may not be so much in advance of the ordinary taxpayer as they now are.

5.4 p.m.

Mr. CHAMBERLAIN: I must say that I admired the ingenuity of the hon. Member for East Fulham (Mr. Wilmot) in manufacturing a grievance on behalf of civil servants out of the fact that it has been possible to restore the system which obtained before 1931, under which, the taxpayer whom the hon. Member called the ordinary taxpayer pays his Income Tax in two equal instalments, instead of in one instalment of three quarters and the other of one quarter. But the hon. Member can only establish what I must call an imaginary grievance by assuming that the business employé in ordinary business is the ordinary taxpayer. Even if he does label him the ordinary taxpayer, he cannot say that that is the ordinary method of collecting Income
Tax, because in fact Income Tax is deducted throughout the year at the source from payment of interest on Government securities, home and foreign, from dividends paid by public companies, and from interest on loans, and ground rents. Income Tax on property under Schedule A is payable not in two sums but in one sum on 1st January. Public companies pay the full year's tax on 1st January. In 1869 the ordinary taxpayer——

Mr. WILMOT: I referred to the comparable taxpayer, the similar man.

Mr. CHAMBERLAIN: I will come to the comparable taxpayer. The man whom the hon. Gentleman calls the ordinary taxpayer in 1869 had to pay (his tax in one sum on 1st January. It was not found possible to continue that system when Income Tax was raised to such great heights as it afterwards was, because the ordinary man, the business employé, was not in a position to find the large lump sum that was required. Accordingly, in 1915 Mr. McKenna introduced the method of payment by two equal instalments. Although I admit that the civil servant does in effect, on the average, pay his Income Tax at an earlier period in the year than the business employé, I do not accept the view that the civil servant is in every way comparable, or so comparable with the business employé

ployé that he must in every respect be treated in the same way. The fact is that the standard method of payment of tax is by a direct payment on 1st January, or by a deduction throughout the whole course of the year as the income comes in. The exception is the case of the business employé who pays in two equal instalments.

Compare the position of the civil servant with the outside employé, and it is obvious that the civil servant has very considerable advantages. He has not only a much greater security of tenure, but he gets his income with certainty and regularity, which makes it no hardship at all to have the tax deduction made from the quarterly payments. Indeed, on the whole I should think it is rather a convenience for him to have his tax deducted in this way than to have to set aside from time to time a sum to make up the larger payment which he would have to make with only two payments in the year. Therefore, while I admire the hon. Member's ingenuity, I cannot admit that there is any real grievance here, or any hardship that requires redress.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 59; Noes, 277.

Division No. 280.]
AYES.
[5.9 p.m.


Acland, Rt. Hon. Sir Francis Dyke
Griffith, F. Kingsley (Middlesbro', W.)
Rea, Walter Russell


Attlee, Clement Richard
Griffiths, George A. (Yorks, W. Riding)
Roberts, Aled (Wrexham)


Banfield, John William
Grithffis, T. (Monmouth, Pontypool)
Rothschild, James A. de


Batey, Joseph
Grunay, Thomas W.
Salter, Dr. Alfred


Brown, C. W. E. (Notts., Mansfield)
Hamilton, Sir R. W. (Orkney & Zetl'nd)
Sinclair, Maj. Rt. Hn. Sir A. (C'thness)


Cape, Thomas
Harris, Sir Percy
Smith, Tom (Normanton)


Cocks, Frederick Seymour
Hicks, Ernest George
Thorne, William James


Cove, William G.
Holdsworth, Herbert
Tinker, John Joseph


Cripps, Sir Stafford
Janner, Barnett
Wayland, Sir William A.


Curry, A. C.
Jenkins, Sir William
West, F. R.


Daggar, George
John, William
White, Henry Graham


Davies, David L. (Pontypridd)
Jones, Henry Haydn (Merioneth)
Williams, David (Swansea, East)


Davies, Rhys John (Westhoughton)
Jones, J. J. (West Ham, Silvertown)
Williams, Dr. John H. (Lianelly)


Dobbie, William
Jones, Morgan (Caerphilly)
Williams, Thomas (York, Don Valley)


Edwards, Charles
Lawson, John James
Wilmot, John


Evans, R. T. (Carmarthen)
Leonard, William
Wood, Sir Murdoch McKenzie (Banff)


Foot, Isaac (Cornwall, Bodmin)
Lunn, William
Young, Ernest J. (Middiesbrough, E.)


Gardner, Benjamin Walter
Mainwaring, William Henry



George, Megan A. Lloyd (Anglesea)
Mallalieu, Edward Lancelot
TELLERS FOR THE AYES.—


Greenwood, Rt. Hon. Arthur
Mason, David M. (Edinburgh, E.)
Mr. Groves and Mr. G. Macdonald.


Grenfell, David Rees (Glamorgan)
Pickering, Ernest H.



NOES.


Acland-Troyte, Lieut.-Colonel
Aske, Sir Robert William
Blindell, James


Adams, Samuel Vyvyan T. (Leeds, W.)
Astor, Maj. Hn. John J. (Kent, Dover)
Borodale, Viscount


Agnew, Lieut.-Com. p. G.
Baldwin, Rt. Hon. Stanley
Bossom, A. C.


Albery, Irving James
Balfour, Capt. Harold (I. of Thanet)
Boulton, W. W.


Allen, Sir J. Sandeman (L'pool, W.)
Barclay-Harvey, C. M.
Bower, Lieut.-Com. Robert Tatton


Allen, Lt.-Col. J. Sandeman (B'k'nh'd)
Barrie, Sir Charles Coupar
Bowyer, Capt. Sir George E. W.


Allen, William (Stoke-on-Trent)
Beaumont, M. W. (Bucks., Aylesbury)
Boyce, H. Leslie


Anstruther-Gray, W. J.
Benn, Sir Arthur Shirley
Braithwaite, J. G. (Hillsborough)


Applin, Lieut.-Col. Reginald V. K.
Bernays, Robert
Broadbent, Colonel John


Brocklebank, C. E. R.
Hellgers, Captain F. F. A.
Procter, Major Henry Adam


Brown, Col. D. C. (N'th'l'd., Hexham)
Heneage, Lieut.-Colonel Arthur P.
Pybus, Sir Percy John


Brown, Brig.-Gen. H.C. (Berks., Newb'y)
Hepworth, Joseph
Radford, E. A.


Buchan, John
Hills, Major Rt. Hon. John Waller
Raikes, Henry V. A. M.


Buchan-Hepburn, P. G. T.
Hore-Belisha, Leslie
Ramsay, Capt. A. H. M. (Midiothian)


Burgin, Dr. Edward Leslie
Hornby, Frank
Ramsay, T. B. W. (Western Islet)


Burnett, John George
Horsbrugh, Florence
Ramsbotham, Herwald


Burton, Colonel Henry Walter
Howard, Tom Forrest
Ramsden, Sir Eugene


Cadogan, Hon. Edward
Hudson, Capt. A. U. M. (Hackney, N.)
Ray, Sir William


Campbell, Sir Edward Taswell (Brmly)
Hunter, Capt. M. J. (Brig)
Reed, Arthur C. (Exeter)


Campbell-Johnston, Malcolm
Hurd, Sir Percy
Reid, Capt. A. Cunningham.


Caporn, Arthur Cecil
Hutchison, W. D. (Essex, Romf'd)
Reid, David D. (County Down)


Carver, Major William H.
Inskip, Rt. Hon. Sir Thomas W. H.
Remer, John R.


Cautley, Sir Henry S.
Iveagh, Countess of
Renwick, Major Gustav A.


Cayzer, Sir Charles (Chester, City)
Jackson, Sir Henry (Wandsworth, C.)
Rhys, Hon. Charles Arthur U.


Cazalet, Thelma (Islington, E.)
Jamleson, Douglas
Rickards, George William


Chamberlain, Rt. Hon. N. (Edgbaston)
Jesson, Major Thomas E.
Roberts, Sir Samuel (Ecciesall)


Clarke, Frank
Kerr, Lieut.-Col. Charles (Montrose)
Robinson, John Roland


Clarry, Reginald George
Kerr, Hamilton W.
Rosbotham, Sir Thomas


Clayton, Sir Christopher
Keyes, Admiral Sir Roger
Ross, Ronald D.


Cobb, Sir Cyril
Kimball, Lawrence
Ruggles-Brise, Colonel E. A.


Cochrane, Commander Hon. A. D.
Knox, Sir Alfred
Runge, Norah Cecil


Colfox, Major William Philip
Lamb, Sir Joseph Quinton
Russell, Albert (Kirkcaldy)


Collins, Rt. Hon. Sir Godfrey
Lambert, Rt. Hon. George
Russell, Alexander West (Tynemouth)


Colville, Lieut.-Colonel J.
Latham, Sir Herbert Paul
Russell, Hamer Field (Sheffield, B'tside)


Conant, R. J. E.
Law, Sir Alfred
Russell, R. J. (Eddisbury)


Cook, Thomas A.
Law, Richard K. (Hull, S. W.)
Rutherford, John (Edmonton)


Cooper, A. Duff
Lees-Jones, John
Salmon, Sir Isidore


Copeland, Ida
Lennox-Boyd, A. T.
Salt, Edward W.


Courthope, Colonel Sir George L.
Levy, Thomas
Samuel, Sir Arthur Michael (F'nham)


Cranborne, Viscount
Liddall, Walter S.
Sandeman, Sir A. N. Stewart


Crooke, J. Smedley
Locker-Lampson, Rt. Hn. G. (Wd. G'n)
Savery, Samuel Servington


Crookshank, Col. C. de Windt (Bootle)
Lockwood, Capt. J. H. (Shipley)
Scone, Lord


Crookshank, Capt. H. C. (Galnsb'ro)
Loder, Captain J. de Vere
Shakespeare, Geoffrey H.


Dalkeith, Earl of
Loftus, Pierce C.
Shaw, Helen B. (Lanark, Bothwell)


Davies, Maj. Geo. F. (Somerset, Yeovil)
Lovat-Fraser, James Alexander
Simmonds, Oliver Edwin


Davison, Sir William Henry
Lumley, Captain Lawrence R.
Skelton, Archibald Noel


Denvllie, Alfred
Lyons, Abraham Montagu
Smiles, Lieut.-Col. Sir Walter D.


Despencer-Robertson, Major J. A. F.
Mabane, William
Smith, Louis W. (Sheffield, Hallam)


Dickie, John P.
MacAndrew, Lieut.-Col. C. G. (Partick)
Smith, Sir Robert (Ab'd'n & K'dine, C.)


Dixon, Rt. Hon. Herbert
MacAndrew, Capt. J. O. (Ayr)
Smithers, Sir Waldron


Dower, Captain A. V. G.
MacDonald, Malcolm (Bassetlaw)
Somerset, Thomas


Drewe, Cedric
Macdonald, Capt. P. D. (I. of W.)
Somerville, Annesley A. (Windsor)


Drummond-Wolff, H. M. C.
McKie, John Hamilton
Soper, Richard


Duckworth, George A. V.
Maclay, Hon. Joseph Paton
Spencer, Captain Richard A.


Duncan, James A. L. (Kensington, N.)
McLean, Major Sir Alan
Spender-Clay, Rt. Hon. Herbert H.


Dunglass, Lord
Maclean, Nell (Glasgow, Govan)
Spens, William Patrick


Eady, George H.
McLean, Dr. W. H. (Tradeston)
Stanley, Rt. Hon. Lord (Fyide)


Edmondson, Major Sir James
Maitland, Adam
Stanley, Hon. O. F. G. (Westmorland)


Elliot, Rt. Hon. Walter
Makins, Brigadier-General Ernest
Stewart, J. H. (Fife, E.)


Elliston, Captain George Sampson
Manningham- Buller, Lt.-Col. Sir M.
Stones, James


Elmley, Viscount
Margesson, Capt. Rt. Hon. H. D. R.
Storey, Samuel


Emmott, Charles E. G. C.
Marsden, Commander Arthur
Strauss, Edward A.


Emrys-Evans, P. V.
Martin, Thomas B.
Stuart, Lord C. Crichton.


Erskine-Bolst, Capt. C. C. (Blackpool)
Mason, Col. Glyn K. (Croydon, N.)
Sueter, Rear-Admiral Sir Murray F.


Evans, Capt. Arthur (Cardiff, S.)
Meller, Sir Richard James
Sugden, Sir Wilfrid Hart


Everard, W. Lindsay
Mills, Major J. D. (New Forest)
Summersby, Charles H.


Fermoy, Lord
Mitchell, Sir W. Lane (Streatham)
Templeton, William P.


Fox, Sir Gifford
Monsell, Rt. Hon. Sir B. Eyres
Thompson, Sir Luke


Fremantle, Sir Francis
Moreing, Adrian C.
Thomson, Sir Frederick Charles


Galbraith, James Francis Wallace
Morris, Owen Temple (Cardiff, E.)
Thorp, Linton Theodore


Ganzonl, Sir John
Morris-Jones, Dr. J. H. (Denbigh)
Titchfield, Major the Marquess of


Gillett, Sir George Masterman
Morrison, G. A. (Scottish Univer'ties)
Todd, Lt.-Col. A. J. K. (B'wick-on-T.)


Gilmour, Lt.-Col. Rt. Hon. Sir John
Morrison, William Shephard
Touche, Gordon Cosmo


Gluckstein, Louis Haile
Munro, Patrick
Train, John


Goff, Sir Park
Nail-Cain, Hon. Ronald
Tryon, Rt. Hon. George Clement


Goodman, Colonel Albert W.
Nation, Brigadier-General J. J. H.
Turton, Robert Hugh


Gower, Sir Robert
Nicholson, Godfrey (Morpeth)
Ward, Lt.-Col. Sir A. L. (Hull)


Graham, Sir F. Fergus (C'mb'rl'd, N.)
Nicholson, Rt. Hn. W. G. (Petersf'ld)
Ward, Sarah Adelaide (Cannock)


Granville, Edgar
Normand, Rt. Hon. Wilfrid
Wardlaw-Milne, Sir John S.


Grattan-Doyle, Sir Nicholas
Oman, Sir Charles William C.
Warrender, Sir Victor A. G.


Graves, Marjorle
Patrick, Colin M.
Watt, Captain George Steven H.


Grimston, R. V.
Peake, Captain Osbert
Wedderburn, Henry James Scrymgeour.


Gritten, W. G. Howard
Pearson, William G.
Weymouth, Viscount


Gunston, Captain D. W.
Peat, Charles U.
Whyte, Jardine Bell


Guy, J. C. Morrison
Percy, Lord Eustace
Willoughby de Eresby, Lord


Hacking, Rt. Hon. Douglas H.
Perkins, Walter R. D.
Wills, Wilfrid D.


Hales, Harold K.
Petherick, M.
Windsor-Cilve, Lieut.-Colonel George


Hanbury, Cecil
Peto, Sir Basil E. (Devon, Barnstaple)
Winterton, Rt. Hon. Earl


Hanley, Dennis A.
Pike, Cecil F.
Wise, Alfred R.


Hartington, Marquess of
Potter, John
Womersley, Sir Walter


Hartland, George A.
Powell, Lieut.-Col. Evelyn G. H.
TELLERS FOR THE NOES.—


Haslam, Sir John (Bolton)
Power, Sir Joh'n Cecil
Sir George Penny and Commander


Headlam, Lieut.-Col. Cuthbert M.
Pownall, Sir Assheton
Southby.

NEW CLAUSE.—(Income Tax relief in respect of contributing to family income.)

For Income Tax purposes income shall not be deemed to include so much of any person's income as he or she may be deemed, for the purpose of any assessment of income for the purpose of assessing unemployment benefit, to be contributing to family resources.—[Mr. Mallalieu.]

Brought up, and read the First time.

5.17 p.m.

Mr. MALLALIEU: I beg to move, "That the Clause be read a Second time."
The words of this new Clause are really quite clear. The object of it is merely to ensure that someone who is contributing to the resources of his family under the needs test shall not have to pay Income Tax upon the money which he is deemed to have contributed to those resources. Those of us who sit on these benches are in agreement with the principle that one should contribute to the upkeep of one's family within certain limits, but it seems to us hard that a man who may be struggling to better his position in the world and may have met with some success, at any rate to the extent of paying Income Tax, should have to pay that tax upon money from which he has derived no benefit whatever. Take the example of a young man who is perhaps the son of a labourer, has had a secondary education and attained a good post, and may be paying a considerable sum in Income Tax. The father comes under the needs test and is refused a certain amount of payment by the authorities on the ground that his son is earning a large sum. The son, therefore, has to pay to the family resources to keep his father to a certain extent while he is unemployed. At the end of the year the Income Tax collector says that he must pay a tax on all his income. That is a simple position, and it does not require many words to explain it to the Chancellor who, I have no doubt, will be sympathetic towards it. I understand the question has been discussed before, but these words are new, and I hope the Chancellor will give them his serious attention for they remove any difficulty that has been felt before. They are clear and will be easily interpreted by the officials.

5.21 p.m.

Mr. GRAHAM WHITE: I wish to support the Second Reading of the new Clause. A new Clause to the Finance Bill to effect the same purpose was moved last year and also to the Finance Bill of 1932. In the discussion which took place on those occasions it was manifest that the whole Committee, and I think I may include the Chancellor of the Exchequer and the Financial Secretary, were in sympathy with the object of the Clause. Indeed, it could hardly be otherwise, because it is manifestly unjust that a citizen of small means who, under the assessment of family needs, has practically the whole of his income assessed for the family maintenance, should receive on top of that liability a note calling on him to pay a considerable sum in Income Tax. Therefore, on previous occasions no word was spoken in the Committee which was not sympathetic with the object of the proposed Clause. There is manifestly a difficulty of an administrative character in meeting the case because Income Tax is an annual assessment whereas the incidence of this particular hardship may last from a week to a period of years. I think, however, that the words of the new Clause have overcome that difficulty.
The importance of the matter really runs somewhat beyond the question of individual hardship, because this particular form of the means test, which aggregates the whole of the family resources, is the most unpopular type of means test. From the moment it operates an entirely new relationship comes into the family, and parents are anxious whether their children intend to remain with them or whether the family will be broken up. That, in fact, often happens. The incidence of Income Tax has been in many cases a last straw which has broken up the family. It is the last straw which the individual has been able to bear. He has gone on for weeks and months contributing practically his whole income to the family pool, and then to his horror he receives an Income Tax demand for £8 or £9 which he is unable to meet. I know of my own knowledge many cases in which people earning £4 and £5 a week have had this disastrous experience. On the last occasion when this matter was before the Committee my right hon. Friend the Financial Secretary said that, so far as it was possible within the existing rules, efforts would be made to deal
with what was admitted to be a hardship and an injustice. In regard to many cases that have been brought to my notice in the intervening period of 12 months, the Income Tax authorities have dealt with them in a sympathetic and effective way. I think it is right to say that, but it will be far better, if it be possible, to find an effective Clause that will remove this matter from the realm of doubt and speculation. That is a thing which the Committee as a whole would wish to secure.

5.25 p.m.

Mr. CURRY: I support my hon. Friends in pressing this new Clause on the attention of the Chancellor of the Exchequer because I believe that there is here a real grievance. Those of us who represent industrial constituencies have had cases brought to our notice time and time again by different individuals. They are generally unmarried people who have made their own way in the world and have risen to a certain standard, and many of them are endeavouring to make preparations to get married and establish a home of their own. In 1931 the means test came along, and they were compelled by its operation to contribute to the household a larger proportion of their income than they had ever been in the habit of doing. Then they found later on that they got no allowance at all for that in respect of their Income Tax assessment. A grievance was felt by these people, and in many instances it cast a strain on family relationships.
The principle of the proposed Clause is not new. We have for years in our Income Tax law given relief to any person who maintains a dependent relative, but these cases cannot come within the regulations, because the regulations were made without regard to any of the circumstances which have risen in the administration of the test. I would like to impress upon the Chancellor of the Exchequer the reality of the grievance which we are trying to bring to his notice. I believe it is true that those who are charged with the administration of the Income Tax law have found in their experience that the cases of this sort which come to their notice are genuine, and they have in every case, so far as the duties laid upon them will permit, done their utmost to meet them.
That being so, we feel it all the more our duty to press for an amendment of the law to meet what is a general desire on the part of those who are charged with the administration in order that their duties may be lightened and that this grievance, which is a real and growing grievance, may be removed.

5.28 p.m.

Mr. WILMOT: Although the Chancellor saw fit to examine the claims of civil servants which I have been putting forward with his blind eye, I trust that in this matter he will show some sympathy. Surely it is indefensible that, while a father of a family should be able to deduct a considerable proportion of his income before it becomes taxable, yet a person who is required by law to use part of his income for the support of unfortunate relatives should have that income taxed as if he were not supporting them at all. The case has been clearly put by hon. Members below the Gangway, and I am sure that all of us on these benches make a most urgent appeal to the Chancellor to remove this grievance. It may be that the Chancellor feels that the number of people whose incomes are large enough to attract Income Tax who are called upon to make these contributions is small, but there is a considerable amount of evidence that the number is a growing one, and that it will go on growing as the means test continues to operate, and when one realises that Income Tax is now payable by people who earn no more than £4 a week we get a very real grievance of very low paid employés having to pay tax on a small income, a very large proportion of which is used up in contributing to the support of dependent relatives, contributions which they are compelled by law to pay., I feel sure the Chancellor of the Exchequer will indicate that some way will be found to remedy what is an obvious injustice.

5.32 p.m.

Mr. HOLDSWORTH: In supporting this Motion, I wish to correct one statement made by the hon. Member for East Fulham (Mr. Wilmot). A single person with only £3 a week pays Income Tax. No excuse can be found for opposing this Clause on the ground that one is unable to assess what a man is paying to the family income, because most public
assistance committees set off a certain amount which shall not be calculated, so that there is some way of assessing what the man actually contributes towards the family pool. In my own constituency, and throughout the City of Bradford generally, I have found complaints, first, that the man is given a very meagre allowance for his own use and then is asked to contribute towards the family income, although he may be the only one working out of three or four in a family, and, in the second place, after he has done so, that the Chancellor of the Exchequer then takes a further contribution from that already greatly reduced income. This would not he a very costly concession, and would appease what is a growing distaste on the part of the people who have to pay. The Chancellor has not given us very much in this Budget, and I think he could extend this little concession towards people who feel that they are being dealt with unjustly.

5.34 p.m.

Mr. HORE-BELISHA: It is quite true, as my hon. Friend the Member for East Birkenhead (Mr. White) said, that this matter has been discussed previously, and I thank him for his statement that the answer I gave last year was sympathetic and that the administration of the Income Tax law has been carried out with greater generosity than before; but, although the principle of the two cases is similar, this is an entirely different Clause. What it requires, apparently, is that in computing a person's income for Income Tax purposes no account shall be taken of so much of his income as may be deemed under the operation of the means test to be contributing to the family resources. Public assistance committees in administering the means test do not, in terms, deem a member of an unemployed person's household to be contributing to the family's needs. They simply take account, in assessing transitional payment, of the resources of the other members of that unemployed person's household, and those resources would presumably include that person's income.
We have to think of this matter not in terms of the old administration but in terms of the new Unemployment Assistance Board, and it may be taken that that authority, concerned with the
administration of the means test, will not overlook the Income Tax payable by a member of the household when having regard to his personal requirements, which they are specifically enjoined to do. In so far as any hardship may persist or endure, it will not be a hardship of Income Tax, and my hon. Friends—one can understand their point of view—are simply using the Income Tax in this connection for a purpose for which it was never intended. I am glad that even those who have associated themselves with this Clause agree with the principle that a man should share the family responsibilities. In so far as that is a problem, it does not concern only the unemployed but applies to the whole community. We all have family responsibilities, and we cannot regard this as an Income Tax matter. I am sorry that the Government cannot accept this Clause as a modification of the present Income Tax procedure.

5.37 p.m.

Sir PERCY HARRIS: I am sorry that we have had such an insipid reply from the Financial Secretary, who, with his remarkable intelligence, which we all recognise, has displayed, if he will forgive me for saying so, an inability to comprehend the case made by my hon. Friends. No one is a greater expert than he is on Income Tax. He knows that already under our law there are allowances for children, and that is an obvious precedent. As a married man gets an allowance for children, does it not seem equally reasonable that if a single man has to keep his mother and father, his sisters and brothers he should be allowed a similar reduction? In the mining, industrial and shipbuilding areas in the North many manual workers are out of employment, but there may be one member of the family who has a Civil Service appointment or is in a co-operative store and making his £4 or £5 a week. He is single and desires to get married, but he finds that under the working of the means test he is required to give up a very substantial part of his income to keep his sisters and brothers and his mother and father, and yet, with his depleted income, he finds the Income Tax collector coming along to collect the tax. The fact that he has to keep the whole of his family is not taken into account
and he is mulcted in the tax just the same. As my hon. Friend the Member for East Birkenhead (Mr. White) has very fairly said, in many parts of the country when the assessment is being made the assessment authorities have made an allowance in respect of such obligations borne by that man. They have felt the hardship was so great that they have turned a blind eye on the case, and been generous in their administration; but that is not in accordance with the law, and we now want to legalise what is very often done in practice.
If there is industrial unrest where is it likely to come from? From the intelligentsia, from the black-coated worker, from the man who has had the advantage of a secondary school education and, owing to the fact that he is quick-witted, has been able to win some Civil Service appointment or get some job in a co-operative store. All around him there is poverty and distress and his friends and relations are out of work, and he finds himself required, first, to maintain his family, and then to meet the demand of the Income Tax collector out of the money which is left and with which he is trying to make himself independent and to provide a home for himself. It would not be a difficult thing to meet our request. Where there is a will there is a way. It is true that the Income Tax law is already very complicated, and some people think too full of qualifications, but if the Government wanted to meet this case they could find the necessary words to insert in an Act of Parliament. The law does allow a concession to a man who has a boy at a secondary school or when he keeps his son at a University, and does it not seem equally reasonable that a single man who has to help to keep his family owing to unuemployment, for which he is not responsible, should be allowed a concession when his liability for Income Tax is being assessed?
We have the advantage of the presence of the Chancellor of the Exchequer, and no one better understands the complexity of our whole industrial problem at the present time, the serious unrest there is in the country, and the importance of removing any feeling of injustice arising from the impression that the State is not acting fairly in the collection of this tax.
I cannot believe that this would be a very heavy loss to the Exchequer, though we are not in a position to estimate the exact sum; but if something could be done to meet this very real sense of grievance I am sure the Government would be doing a really good thing and would give a great deal of satisfaction to a number of hard-working and honest people.

5.43 p.m.

Lieut.-Colonel SANDEMAN ALLEN: Before the Financial Secretary to the Treasury spoke I wanted to ask him a question, and what he has said has enabled me to put that question more easily. He said that the public assistance authorities would not overlook the fact that Income Tax had been charged in these cases. Can he give the Committee an assurance that the Income Tax authorities will not overlook the fact that this assistance to his family has been charged against the man's income?

5.44 p.m.

Mr. J. JONES: I am not going to travel from Dan to Beersheba in connection with this matter, but wish to put the case as it exists in my own constituency. There are men employed there who are public servants receiving what might be called fairly decent salaries for the work that they do. Unfortunately for them, their relatives are out of employment. Their fathers and mothers are not old enough to receive old age pension. We know what is happening, how men verging upon 60 years of age are not wanted. The father is out of work and the mother is out of work, and, in addition, the brothers and sisters of this man are out of work too. When the family apply for public assistance because the one son in work cannot afford to keep them all "the rule is run over them." "What is your income?" "None, so far as the family generally are concerned. They are out of employment, and there is nothing except unemployment pay, which only lasts for a short period." "Whom have you got?" "The eldest son"—and he is the one who has to foot the bill. Perhaps he is a married man with a couple of children of his own. He has those responsibilities to face, and he can also be charged with something towards the maintenance of the rest of the family because he happens to be in a certain position.
Having paid that Income Tax—which is an unseen Income Tax so far as the Commissioners are concerned—he then has to pay another Income Tax. Is that fair? I know that the Financial Secretary to the Treasury is full of sympathy, but we want him to be full of something more than sympathy; we want him to get down to brass tacks. Let him imagine himself in the position of the man about whom I am speaking. That is not an extraordinary case, because there are thousands of instances throughout Great Britain of men who are fortunate enough to be in a decent position, so far as ordinary life is concerned, and who find that their families are down and out and who have to face the issue of the means test. Let us have a means test all round. Let some of the people who are talking about this face it themselves. Would they like to keep their families? I have given the reason why a man has to pay Income Tax twice. He has to maintain his unfortunate family, including his brothers and sisters, because they are out of work, or he has to make a contribution towards their maintenance. He gets a demand from the Income Tax people for another contribution, and no allowance is given to him for those whom he has to maintain. It would be fair to give an allowance in those circumstances; therefore I am supporting the Clause.

5.48 p.m.

Mr. WHITE: The statement has been attributed to me that Income Tax administration has been better than ever before. My knowledge does not entitle me to make a statement of that kind. What I wished to put on record was the fact that in some cases, where there was an admitted grievance of hardship, the administration had taken the circumstances into account and by some extension or interpretation of rules had been able to obviate the hardship. It has not been possible to do so in every case, and that is why my hon. Friend and

myself have raised the matter to-day. It is very desirable that a serious effort should be made to deal with the matter in a practical way. There are ways of contracting out. For example, a man in receipt of £3 or £4 a week is reduced to the position in which he has not a penny left. All has been spent on himself and his family, and then he has to face an Income Tax notice for £8 or £9. It is open to him to pay over the whole of the money that he gets on Friday night, and to repeat that payment as long as is necessary to clear off the debt. Then he goes to the public assistanec committee and says that he is in fact destitute, and asks to be relieved. This is a very important question, and some practical step should be taken to regularise the position once and for all.

5.49 p.m.

Mr. JOHN WILMOT: I rise only to ask the Financial Secretary to the Treasury to explain one remark that he made, and which seems to bear a construction which is extraordinarily important in this connection. I understood him to say that the public assistance authorities will be enjoined under the Bill to have regard to the tax upon a man's income in assessing the amount which he can be called upon to pay. Does that mean that they are to be instructed by the Minister to regard only the net income as income and not the gross income? If that is the meaning of the Minister's statement, the case which has been put by those who put forward this Clause has largely been met. If the Commissioners are required to have regard only to net income after the payment of tax, what we want will be achieved. Possibly that is the method by which the Chancellor of the Exchequer has decided to meet this very real and human claim.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 58; Noes, 267.

Division No. 281.]
AYES.
[5.52 p.m.


Aske, Sir Robert William
Cripps, Sir Stafford
Griffith, F. Kingsley (Middlesbro', W.)


Attlee, Clement Richard
Curry, A. C.
Griffiths, George A. (Yorks, W. Riding)


Banfield, John William
Daggar, George
Griffiths, T. (Monmouth, Pontypool)


Batey, Joseph
Davies, David L. (Pontypridd)
Groves, Thomas E.


Bernays, Robert
Dobbie, William
Grunay, Thomas W.


Bevan, Aneurin (Ebbw Vale)
Edwards, Charles
Hamilton, Sir R. W. (Orkney & Zetl'nd)


Brown, C. W. E. (Notts., Mansfield)
Evans, R. T. (Carmarthen)
Harris, Sir Percy


Cape, Thomas
Gardner, Benjamin Walter
Holdsworth, Herbert


Cocks, Frederick Seymour
Greenwood, Rt. Hon. Arthur
Janner, Barnett


Cove, William G.
Grenfell, David Rees (Glamorgan)
Jenkins, Sir William


John, William
Mallalleu, Edward Lancelot
West, F. R.


Jones, Henry Haydn (Merioneth)
Mason, David M. (Edinburgh, E.)
White, Henry Graham


Jones, J. J. (West Ham, Silvertown)
Milner, Major James
Williams, David (Swansea, East)


Jones, Morgan (Caerphilly)
Pickering, Ernest H.
Williams Dr. John H. (Lianelly)


Kirkwood, David
Roberts, Aled (Wrexham)
Wilmot, John


Lawson, John James
Salter, Dr. Alfred
Young, Ernest J. (Middlesbrough, E.)


Leonard, William
Sinclair, Maj. Rt. Hn. Sir A. (C'thness)



Lunn, William
Smith, Tom (Normanton)
TELLERS FOR THE AYES.—


Macdonald, Gordon (Ince)
Summersby, Charles H.
Mr. Walter Rea and Mr. Harcourt


Maclean, Nell (Giasgow, Govan)
Thorne, William James
Johnstone.


Mainwaring, William Henry
Tinker, John Joseph



NOES.


Acland-Troyte, Lieut.-Colonel
Duckworth, George A. v.
Lees-Jones, John


Agnew, Lieut.-Com. P. G.
Duncan, James A. L. (Kensington, N.)
Lennox-Boyd, A. T.


Allen, Sir J. Sandeman (Liverp'l, W.)
Eady, George H.
Liddall, Walter S.


Allen, Lt.-Col. J. Sandeman (B'k'nh'd)
Edmondson, Major Sir James
Little, Graham-, Sir Ernest


Allen, William (Stoke-on-Trent)
Elliot, Rt. Hon. Walter
Locker-Lampson, Rt. Hn. G. (Wd.Gr'n)


Anstruther-Gray, W. J.
Ellis, Sir R. Geoffrey
Lockwood, John C. (Hackney, C.)


Applin, Lieut.-Col. Reginald V. K.
Elliston, Captain George Sampson
Lockwood, Capt. J. H. (Shipley)


Astor, Maj. Hn. John J. (Kent, Dover)
Elmley, Viscount
Loder, Captain J. de Vere


Baldwin, Rt. Hon. Stanley
Emmott, Charles E. G. C.
Lovat-Fraser, James Alexander


Balfour, Capt. Harold (I. of Thanet)
Emrys-Evans, P. V.
Lumley, Captain Lawrence R.


Balniel, Lord
Entwistle, Cyril Fullard
MacAndrew, Lieut.-Col. C. G. (Partick)


Banks, Sir Reginald Mitchell
Evans, Capt. Arthur (Cardiff, S.)
MacAndrew, Capt. J. O. (Ayr)


Barclay-Harvey, C. M.
Everard, W. Lindsay
MacDonald, Malcolm (Bassetlaw)


Barrie, Sir Charles Coupar
Fermoy, Lord
Macdonald, Capt. P. D. (I. of W.)


Beaumont, M. W. (Bucks., Aylesbury)
Fox, Sir Gifford
McKie, John Hamilton


Beaumont, Hon. R.E.B. (Portsm'th, C.)
Fremantle, Sir Francis
McLean, Major Sir Alan


Bell, Sir Alfred L.
Galbraith, James Francis Wallace
Makins, Brigadier-General Ernest


Benn, Sir Arthur Shirley
Ganzonl, Sir John
Manningham-Buller, Lt.-Col. Sir M.


Blindell, James
Gillett, Sir George Masterman
Margesson, Capt. Rt. Hon. H. D. R.


Borodale, Viscount
Gilmour, Lt.-Col. Rt. Hon. Sir John
Marsden, Commander Arthur


Bossom, A. C.
Gluckstein, Louis Halle
Martin, Thomas B.


Boulton, W. W.
Glyn, Major Sir Ralph G. C.
Mason, Col. Glyn K. (Croydon, N.)


Bower, Lieut.-Com. Robert Tatton
Golf, Sir Park
Meller, Sir Richard James


Bowyer, Capt. Sir George E. W.
Goodman, Colonel Albert W.
Mills, Major J. D. (New Forest)


Braithwalte, J. G. (Hillsborough)
Graham, Sir F. Fergus (C'mb'rl'd. N.)
Mitchell, Sir W. Lane (Streatham)


Broadbent, Colonel John
Granville, Edgar
Monsell, Rt. Hon. Sir B. Eyres


Brocklebank, C. E. R.
Grattan-Doyle, Sir Nicholas
Moreing, Adrian C.


Brown, Col. D. C. (N'th'l'd., Hexham)
Graves, Marjorie
Morris-Jones, Dr. J. H. (Denbigh)


Brown, Brig. -Gen. H.C. (Berks., Newb'y)
Grimston, R. V.
Munro, Patrick


Buchan-Hepburn, P. G. T.
Gritten, W. G. Howard
Nicholson, Godfrey (Morpeth)


Burnett, John George
Guinness, Thomas L. E. B.
Nicholson, Rt. Hn. W. G. (Petersf'ld)


Burton, Colonel Henry Walter
Gunston, Captain D. W.
Normand, Rt. Hon. Wilfrid


Campbell, Sir Edward Taswell (Brmly)
Guy, J. C. Morrison
Ormsby-Gore, Rt. Hon. William G. A.


Campbell-Johnston, Malcolm
Hacking, Rt. Hon. Douglas H.
Patrick, Colin M.


Caporn, Arthur Cecil
Hales, Harold K.
Peake, Captain Osbert


Carver, Major William H.
Hanbury, Cecil
Peat, Charles u.


Cautley, Sir Henry S.
Hanley, Dennis A.
Percy, Lord Eustace


Cayzer, Sir Charles (Chester, City)
Hartington, Marquess of
Perkins, Walter R. D.


Chamberlain, Rt. Hon. N. (Edgbaston)
Haslam, Sir John (Bolton)
Petherick, M.


Churchill, Rt. Hon. Winston Spencer
Headlam, Lieut.-Col. Cuthbert M.
Peto, Sir Basil E. (Devon, B'nstaple)


Clarke, Frank
Hellgers, Captain F. F. A.
Peto, Geoffrey K, (W'verh'pt'n, Bilston)


Clarry, Reginald George
Heneage, Lieut.-Colonel Arthur P.
Pike, Cecil F.


Clayton, Sir Christopher
Hepworth, Joseph
Potter, John


Cobb, Sir Cyril
Hills, Major Rt. Hon. John Waller
Powell, Lieut.-Col. Evelyn G. H.


Colfox, Major William Philip
Hore-Belisha, Leslie
Power, Sir John Cecil


Collins, Rt. Hon. Sir Godfrey
Hornby, Frank
Pownall, Sir Assheton


Colville, Lieut.-Colonel J.
Horsbrugh, Florence
Procter, Major Henry Adam


Conant, R. J. E.
Howard, Tom Forrest
Pybus, Sir Percy John


Cook, Thomas A.
Hudson, Capt. A. U. M. (Hackney, N.)
Radford, E. A.


Cooper, A. Duff
Hunter, Dr. Joseph (Dumfries)
Raikes, Henry V. A. M.


Copeland, Ida
Hunter, Capt. M. J. (Brigg)
Ramsay, T. B. W. (Western Isles)


Courthope, Colonel Sir George L.
Hunter-Weston, Lt.-Gen. Sir Aylmer
Ramsbotham, Herwald


Cranborne, Viscount
Hurd, Sir Percy
Ramsden, Sir Eugene


Croft, Brigadier-General Sir H.
Hutchison, W. D. (Essex, Romf'd)
Reed, Arthur C. (Exeter)


Crooke, J. Smedley
Inskip, Rt. Hon. Sir Thomas W. H.
Reld, Capt. A. Cunningham.


Crookshank, Col. C. de Windt (Bootle)
Iveagh, Countess of
Remer, John R.


Crookshank, Capt. H. C. (Galnsb'ro)
Jackson, Sir Henry (Wandsworth, C.)
Rhys, Hon. Charles Arthur U.


Croom-Johnson, R. P.
Jamleson, Douglas
Rickards, George William


Crossley, A. C.
Jesson, Major Thomas E.
Roberts, Sir Samuel (Ecclesall)


Culverwell, Cyril Tom
Ker, J. Campbell
Robinson, John Roland


Dalkeith, Earl of
Kerr, Lieut.-Col. Charles (Montrose)
Rosbotham, Sir Thomas


Davies, Maj. Geo. F. (Somerset, Yeovil)
Kerr, Hamilton W.
Ross, Ronald D.


Davison, Sir William Henry
Keyes, Admiral Sir Roger
Ross Taylor, Walter (Woodbridge)


Despencer-Robertson, Major J. A. F.
Kimball, Lawrence
Ruggles-Brise, Colonel E. A.


Dickle, John P.
Knox, Sir Alfred
Runciman, Rt. Hon. Walter


Dixon, Rt. Hon. Herbert
Lamb, Sir Joseph Quinton
Runge, Norah Cecil


Donner, P. W.
Lambert, Rt. Hon. George
Russell, Albert (Kirkcaldy)


Dower, Captain A. V. G.
Latham, Sir Herbert Paul
Russell, Alexander West (Tynemouth)


Drewe, Cedric
Law, Sir Alfred
Russell, Hamer Field (Sheffield, B'tside)


Drummond-Wolff, H. M. C.
Law, Richard K. (Hull, S. W.)
Russell, R. J. (Eddisbury)




Rutherford, John (Edmonton)
Spencer, Captain Richard A.
Train, John


Salmon, Sir Isidore
Spender-Clay, Rt. Hon. Herbert H.
Tryon, Rt. Hon. George Clement


Salt, Edward W.
Spens, William Patrick
Turton, Robert Hugh


Samuel, Sir Arthur Michael (F'nham)
Stanley, Rt. Hon. Lord (Fylde)
Ward, Irene Mary Bewick (Wallsend)


Sandeman, Sir A. N. Stewart
Stanley, Hon. O. F. C. (Westmorland)
Ward, Sarah Adelaide (Cannock)


Sassoon, Rt. Hon. Sir Philip A. G. D.
Stones, James
Wardlaw-Milne, Sir John S.


Savery, Samuel Servington
Storey, Samuel
Warrencer, Sir Victor A. G.


Scone, Lord
Stourton, Hon. John J.
Wayland, Sir William A.


Shakespeare, Geoffrey H.
Strauss, Edward A.
Wedderburn, Henry James Scrymgeour.


Shaw, Helen B. (Lanark, Bothwell)
Strickland, Captain W. F.
Whyte, Jardine Bell


Shaw, Captain William T. (Forfar)
Stuart, Hon. J. (Moray and Nairn)
Willoughby de Eresby, Lord


Skelton, Archibald Noel
Stuart, Lord C. Crichton.
Wills, Wilfrid D.


Smiles, Lieut.-Col. Sir Walter D.
Sueter, Rear-Admiral Sir Murray F.
Windsor-Clive, Lieut.-Colonel George


Smith, Louis W. (Sheffield, Hallam)
Sugden, Sir Wilfrid Hart
Winterton, Rt. Hon. Earl


Smith, Sir Robert (Ab'd'n & K'dine, C)
Templeton, William P.
Wise, Alfred R.


Smithers, Sir Waldron
Thomson, Sir Frederick Charles
Withers, Sir John James


Somerset, Thomas
Thorp, Linton Theodore
Womersley, Sir Walter


Somerville, Annesley A. (Windsor)
Titchfield, Major the Marquess of



Soper, Richard
Todd, A. L. S. (Kingswinford)
TELLERS FOR THE NOES.—


Southby, Commander Archibald R. J.
Touche, Gordon Cosmo
Sir George Penny and Lieut.-Colonel




Sir A. Lambert Ward.

NEW CLAUSE.—(Reduction of duty on heavy hydrocarbon oils.)

Sub-section (1) of Section six of the Finance Act, 1933, shall have effect as though the words "seven pence" were replaced by the words "seven pence halfpenny."—[Mr. Mallalieu.]

Brought up, and read the First time.

6.0 p.m.

Mr. MALLALIEU: I beg to move, "That the Clause be read a Second time."
There was originally a rebate of the whole of the tax so far as heavy hydrocarbon oils were concerned. The rebate was subsequently reduced from 8d. to 7d., leaving a tax of 1d. upon these heavy hydrocarbon oils. This proposed new Clause seeks to cut down the existing tax by ½d., leaving it at ½d. instead of 1d. The primary object of the tax has been stated by the Chancellor of the Exchequer on previous occasions to be the helping of the coal industry, and I think he said at the same time that the secondary object was a revenue object. I am going to suggest to the Committee that, even if he must still pursue the revenue object, we should look a little more closely into the aspect of the coal industry and the benefit which that industry may or may not receive from the tax.
It has been assumed rather too easily, in my opinion, that the decline in the number of men employed in the coal industry from somewhat over 1,000,000 before the War to 800,000 in November of last year has been due to the use of fuel oil. In fact, the Coal Utilisation Council said the other day, almost glibly as I think, that oil was the most serious competitor of coal and its derivatives; and, in reply to a question which I put to the Secretary for Mines on 5th June
last, the hon. Gentleman stated, on the authority of the same Council, that a large number of tons of coal were taken last year, as well as the year before, entirely on account of the tax which was imposed upon fuel oil, thereby, I suppose, justifying the imposition of the tax in the interests of the coal industry. In giving the details of the estimated figure of 600,000 tons per annum furnished by the Coal Utilisation Council, the Secretary for Mines said that 316,000 tons had gone back to coal from oil, 83,000 tons had gone back to coke, and so forth. The hon. Gentleman expressed himself as unable to give details as to how these figures were arrived at, but without further information as to those details it would not be proper to continue this burden upon oil-using industries any further, whatever may be said for the revenue consideration, on which I do not propose to touch.
There is not the slightest doubt that in certain instances, the most notable being that of coal for bunkers, oil has superseded coal to a very large extent, for whereas, in 1914, 96.6 per cent. of the world's mechanically propelled ships used coal, in 1932 the percentage was barely 54.6. Of course, however, this tax does not apply to such oil, and, therefore, I do not think it can be suggested that, so far as bunkers are concerned, the tax upon oil can benefit the coal industry in the slightest degree. Estimates have been given in the House before now of the amount of coal which the industries that have thrived upon oil have caused to be used in this country. For instance, in the making of motor cars, coaches and lorries, a substantial amount of coal is needed, to say nothing of the aeroplane industry, It has been estimated
by very eminent authorities that, for every ton of oil imported into this country, a demand is created for not less than a ton of coal. Therefore, to tax oil in order to increase the quantity of coal consumed is a misguided policy.
Surely, it is only desirable to increase the consumption of coal so far as the increase of consumption is economical. I do not suppose that the Chancellor of the Exchequer would discourage the spending of money upon research which had for its object the lessening of the consumption of coal so far as that consumption was uneconomic, and that, surely, has been one of the chief causes of the fall in employment in the coal industry. The utilisation of coal has become so very much more efficient—a desirable process. If we are to tax oil regardless of whether coal can be used as efficiently as oil, we are really just flying in the teeth of the very process which everyone would seek to encourage, namely, the bringing about of efficiency in the consumption of coal as much as in the consumption of any other commodity for which industry has to pay. Fuel oil and coal are primarily only of use in so far as they serve industry; and, in so far as we tax industry for the benefit of the production of these two subjects, which normally should themselves serve industry, we are doing a topsy-turvy thing. Therefore, I would ask the Chancellor of the Exchequer, if he still persists in his revenue object with this Fuel Oil Tax, at least to consider a reduction of the tax by one-half, in order that those industries which have put in the most up-to-date machinery in order to consume oil and produce their power more economically may not he unduly penalised by the tax.

6.7 p.m.

Captain ARCHIBALD RAMSAY: We are now familiar with the usual form of the arguments in favour of reducing the duty on hydrocarbon oils, and we realise that their supporters think that they are on the strongest ground when they pretend that these hydrocarbon oils are not really serious competitors of coal—that the advantages they have conferred upon the coal industry almost, if not more than, outweigh the work and profits of which they have undoubtedly robbed it by supplanting coal-consuming plant. This argument
is by no means as near the truth in these days as it may have been some years ago. To-day I think it is no exaggeration to say, and I am sure that those who are concerned with the coal industry or represent mining interests will assert emphatically, that there is really no alliance between these two forms of fuel; they are for practical purposes in direct competition the one with the other.
I agree with the hon. Member for Colne Valley (Mr. Mallalieu) that one particular industry should not be handicapped for the benefit of another, but within the last few years inventions in connection with coal gas and the utilisation of coal have, in my humble opinion, and I can produce facts to prove it, entirely altered the situation. It used to be the case that the up-to-date man who wished to reduce his costs and put in a plant that could compete economically with anyone in Europe would put in an oil-burning plant, but now that same man, with the information that is at his disposal, will scrap his oil-burning plant and replace it by some form of gas chamber or coke oven or other coal-consuming plant. Therefore, we have the position that these two fuels are not allies, but direct competitors, with the superior qualities and superior economic forces now on the side of coal. Therefore, it was with great surprise that I observed the name of an hon. Member representing miners attached to a Clause to much the same effect as the present one.
I had placed in my hands a very short time ago two typical instances which I should like to give to the Committee, if they will bear with me for a few moments, in order to prove my assertion that, while it used to be the case that by substituting oil-burning plant an economic advantage could be gained, oil has now been superseded by coal in a great many ways, and I believe that the coal industry can claim that in practically all ways it has shown superiority. I will give two typical instances which have occurred within very recent times. One industry, which was consuming 10 tons of oil per week, replaced its oil-burning plant by a coal-consuming plant, with the result that, whereas it used to burn 10 tons of oil per week, thereafter it consumed 15 tons of coal. The quantity of
fuel used was 1½ times as great, but the price of the oil was 2½ times the price of the coal, so that this particular industry saves the cost of its change of installation every 19 weeks, without reckoning the tax. The other case was roughly on the same lines. An oil-consuming plant was replaced by a coal-consuming plant, and the consumption of fuel was increased rather more than 1½ times. The prices were slightly less favourable on the contracts made, but still this industry is saving the cost of the change of installation, again without including the tax, once every 33 weeks. These are most important facts, particularly for this country.
We have all welcomed the efforts which the Government have made to assist the coal industry to hold its own, and a stage has been reached at which, thanks to inventions, the coal industry is in a position to more than hold its own; indeed, it can now improve upon oil in nearly all cases, as is borne out by the two instances which I have given. When we come to consider the case of this country under ordinary peace time conditions relying, as we do to a great extent, on the coal industry, it is high time to see to it that these facts are properly known and understood. On purely economic grounds it is worth while to do everything we can in the first place to prevent the scrapping of coal-burning plant and its replacing by oil, when it can be replaced by a more efficient coal-burning system. The Miners' Federation have grasped this fact and in view of their manifesto, I am all the more astonished to find the name of the hon. Member for Normanton (Mr. T. Smith) down to an Amendment which seeks to abolish the whole tax. May I read an extract from that manifesto which appeared in the "Times" of 23rd February?
It is difficult to believe that fuel consumers in this country would continue to buy foreign oil if they were fully acquainted with up-to-date methods of burning British coal. Methods of coal burning have recently been so improved that the advantages popularly associated with oil burning no longer exists. Foreign oil is a menace to our country, sapping her economic foundations and taking away the livelihood of her people. Its total supercession by our own fuel would have no harmful reaction on trade and industry. On the contrary, by reviving the great coal industry, its suppression would revitalise the industrial life of our country.
Those are strong words. I would not stress them. I would not cross one t or dot one i. I am glad the Miners' Federation have had the foresight, the knowledge and the courage to put this on paper. It is only a pity that their representatives in the House have been registering adverse votes on the subject so consistently, and I hope in the future we shall find them going with us into the Lobby to support the Chancellor of the Exchequer in any measures that he may take for sustaining the duties on hydrocarbon oils at their present level or, if necessary, adding to them. I ask the right hon. Gentleman to reject the Clause.

Mr. MALLALI EU: If, as the hon. and gallant Gentleman suggests, coal can be used as efficiently as oil in most industries, why is it necessary to have the tax at all to protect the coal?

Captain RAMSAY: That is a question for the Chancellor to answer.

6.18 p.m.

Mr. MANDER: I hope that the Chancellor will answer the question. When this tax was first introduced 12 months ago, it evoked a great deal of opposition from all quarters of the House and all parts of the country, because of its unexpected nature and the very serious burden that it was obviously going to impose on some of the most progressive manufacturers in the country who had adopted the use of fuel oil for manufacturing purposes. From no part of the country were those protests more vocal than from the Black Country. On one or two occasions I, with others, voiced those opinions in the interests of many of those trades which have had to accommodate themselves, whether they liked it or not, to changed conditions and to bear this burden. Twelve months have gone by, and I hope the Chancellor will be able to tell us something of the experience of that time and whether he does not feel that, in view of what has happened, he is able now to reduce the tax somewhat and to hold out the hope of taking it away altogether. We have had it clearly demonstrated that it is no longer necessary for the protection of coal. The protests in many parts of the country, the Black Country in particular, are still strong, and the manufacturers feel very dissatisfied, as they did a year ago, at being asked to bear this burden, which
has fallen so severely on their shoulders alone, to help the coal industry. I would ask him to review the position now and to hold out some hope, if he can, that, if not now, at any rate in the near future it may be possible to remove this heavy burden.

6.22 p.m.

Mr. LEONARD: The distributive trades are being forced to bear a burden because of this tax. That is especially the case with bakeries, laundries and dairies. I am informed that the present price of oil is 52s. 6d. a ton, which is about 2½d. a gallon. Last year's tax of a penny a gallon approximately adds 40 per cent. to the cost. There is one large society which now bears an additional cost of £4,000 per annum. The Wholesale Co-operative Society itself answered the call to bring in this new type of fuel. It uses 25,000 tons per annum, and has to meet an additional cost of £26,000. I trust that the Chancellor of the Exchequer will give further consideration to the points that have been put forward, and will be able to give some relief.

6.25 p.m.

Major Sir ARCHIBALD SINCLAIR: I should like to associate myself with those who have urged on the Chancellor of the Exchequer the advantages of reducing this tax. The hon. and gallant Gentleman the Member for Peebles (Captain Ramsay), who is always so vigilant in the interests of the miners, said he would join with Members on this side in asking for a reduction of the tax if it could be shown that it was for the welfare of any industry. The hon. Member who spoke last has mentioned a number of industries which view the tax as a very heavy additional burden. I should like to mention another—the industry of electrical supply. Public electricity undertakings have been the pioneers in electrical supply, and they have found through long experience that the oil engine is the best type of prime mover for their purpose, and the development in many districts has been based upon the use of the oil-engine as the type of prime mover which is the best calculated to give a cheap and efficient supply of electricity.
The effect of this tax has been' to cause an increase in oil fuel costs of from 25
per cent. to 33 per cent. to these public electricity undertakings. The increase is borne by the consumers. It is a burden imposed on industry and the development of electricity, which, we all agree, is immensely in the interests of industry as a whole, and to foster which this Parliament has passed a number of Acts in recent years, is retarded. It is disheartening to those who have been for a long series of years applying their minds to the development of electricity, the reduction of costs, and scientific progress in this, that and the other direction to find their efforts offset by this arbitrary tax. The amount of revenue is very small. It would amount to about £30,000. That is a small sum to the Treasury, but it would be of immense value to these undertakings, and would enable them to cheapen and develop the supply of electricity. Fishing vessels and coasting steamers are exempt, and I suggest that public electricity undertakings are at least as important.

Mr. CHAMBERLAIN: Has the right hon. Baronet an Amendment down to that effect?

Sir A. SINCLAIR: No, I am supporting the general case for a reduction of the tax. I am going to give one other case, and I hope the Chancellor will see his way to give us the whole of the reduction for which we ask. If he would be willing to consider sympathetically and favourably an Amendment on these lines, I would either await the introduction of one by him on Report or I should be very glad to put one down, if he would prefer me to follow that course, which would deal only with the question of public electricity supply undertakings.
The other case that I was going to bring forward is that of hospitals. I know of a hospital in which the burden of the tax, based upon the average fuel costs of the last three years, would amount to £2,400, an increase of 42 per cent. Obviously the hospital is not going to face up to that. It is going to do what the Chancellor intended it to do when he introduced the tax, and change to coal. That means an expenditure of £2,000 on conversion. It means that the hospital will be forced to use a fuel less well adapted to hospital purposes than oil. Oil is far more easily handled. It is much cleaner. There is no residue to dispose
of. There are no fumes to fill the corridors of the hospital. Therefore, they will be using a fuel which will give a less good service to the sick in the hospital than the oil fuel does. It will be doing this at a cost, first, of £2,500 paid in tax before and during the conversion of their plant, and, secondly, at a cost of £2,000 after the conversion of their plant. That is a cost of £4,500 diverted from the service of the sick in order to provide the hospital with a plant less suitable for the purposes of a hospital than they had before.

Mr. PETHERICK: Can the right hon. and gallant Gentleman say what will be the difference in the annual cost of conversion from oil to coal in the case of that hospital?

Sir A. SINCLAIR: I have not that particular figure, but I can give two figures which I think are more important. First of all, there is the cost which the hospital would have incurred if they had kept to the fuel which is best for the service of the hospital and of the sick. If they had kept to oil fuel it would have cost £2,400 a year. They have been compelled to convert to a less suitable fuel which has cost them, first of all, £2,500 paid in tax before and during conversion of plant, and, secondly, £2,000 actual cost of conversion, making a total of £4,500.

Sir ADRIAN BAILLIE: Is it not a fact that the makers of the coal plants have, in cases where there has been conversion from oil to coal, undertaken to guarantee that the cost will be met out of savings which will ensue from using coal?

Sir A. SINCLAIR: I have not the slightest information on that particular point, which seems to be rather hypothetical. I am dealing with facts.

Sir A. BAILLIE: If the right hon. and gallant Gentleman looks into the matter, he will find that it is a fact and not hypothetical at all.

Sir A. SINCLAIR: I should call it an advertisement of the coal people who say that they produce these developments. All I can say is that the hospital to which I refer is by no means convinced of its advantage, and, even if they had a financial advantage in changing from oil to coal, they would still think it far better to stay on oil if it were not for the excessive cost of oil. What the hon. Baronet said may be true in the sense
that if you put a tax on a particular article and make it more expensive it will be cheaper to use another article which is not cheaper on any other account. The hon. and gallant Member opposite shakes his head. If coal is cheaper why not leave it to the hospital to make a decision in the interests of the sick and the better service for the sick? They have no prejudice in favour of oil. If it be true that it will be cheaper to have coal, and it gives equally efficient service to the sick, they will be only too delighted to change to coal without being compelled to do it by putting up the cost of using oil fuel and diminishing the service which they are able to give to the sick.
Other hon. Members have dealt with the general effect of this tax upon industry. In the case of some industries I see that there is an increase of 25 to 30 per cent. in cost. In the case of the hospital it represents an increase of 42 per cent. in cost. I suggest to the Chancellor of the Exchequer that it would give a real stimulus to a wide range of industries if he would lighten the tax in the way we suggest. He has laid down a principle in this Budget to which I gladly assent, that when we have a surplus to dispose of it should be given to those who made sacrifices in the years since 1931. This is a more recent sacrifice, but it is one bearing very heavily on certain industries at the present time. The burden upon the consumption and development of electricity, upon the consumers of electricity, upon industries which consume oil, upon the employment of labour in those industries, and upon the sick in the hospitals should be removed, or at any rate alleviated, and therefore I associate myself with the hon. Members who have asked the Chancellor of the Exchequer to accept this Clause.

6.36 p.m.

Mr. CHAMBERLAIN: The right hon. and gallant Gentleman stated a little while ago that if the electricity undertakings were to enjoy the relief from this tax which he desires to see, it would cost probably not more than £30,000. The reason why I asked if he had a Clause down to that effect was because he was arguing on a Clause which would have a very different effect—a Clause which halves the duty all round, the cost of
which to the Exchequer would not be £30,000, but probably from £1,250,000 to £1,500,000 a year. The whole position has to be faced, and obviously it is not much consolation to say that if I did something quite different from what the Clause asked me to do it would not cost very much money. I have to consider whether I can do what the Clause asks me to do. I would make this further observation and comment on the speech to which we have just listened. The right hon. and gallant Gentleman has used as an instance of what has happened in consequence of the imposition of this tax last year, the case of the hospital, which he said had been compelled to change its whole installation of heating from the use of oil to the use of coal, and he said they had spent a considerable amount of money on the conversion. What would they think of him if he were to induce me to take away the whole object of making this conversion within a year of making it? I do not think he would have a pleasing reception from his friends at the hospital if he were to put them in such a dilemma to-day.
Last year when this tax was first imposed, it is true that it was received with a great deal of opposition from certain quarters of the House, and the arguments put up were fortified by a great number of dogmatic assertions as to the injurious, and indeed disastrous, effect which the tax would have upon certain important industries. I think I remember pointing out at the time that it is only human nature that when a new impost is suggested those who may be liable to it see only the objections, but when they find that the impost is a fact they set themselves for the first time seriously to see how they can mitigate the burden as far as possible. That perhaps is something of the answer I might make to the hon. Member for East Wolverhampton (Mr. Mander) when he triumphantly asked my hon. and gallant Friend the Member for Midlothian and Peebles (Captain A. Ramsay) why it was necessary to put on a duty when, as a matter of fact, coal could beat oil every time.
Previous to the imposition of this duty on oil there was a definite trend from coal towards oil, people being under the impression that oil was for various reasons, partly on account of price, partly
on account of ease of handling, and partly for other reasons, better and more efficient for the purpose than coal. That was their impression. One of the reasons which I gave for imposing the duty last year was that I thought it was in the interests of the country that that trend should, if possible, be arrested, and I did so believing at the time that the advantage in the use of coal and its various derivatives had gone a good deal further perhaps than was known to any of those who were undoubtedly attracted at first to the superior advantages of oil.
My hon. and gallant Friend in the very interesting speech which he made a little while ago has given his view and supported it with some instances to show that in fact when manufacturers and other users of fuel are compelled, or are induced by a Measure of this kind, to look and see if there is actually a difference between coal and oil, they find in many cases—perhaps as time goes on they will find more—that they have been mistaken in supposing that oil was better or cheaper for their purpose than coal and its derivatives. Having been, therefore, induced by the slight weighting of the balance to look into the question seriously, they have found that after all the difference, instead of being in favour of oil, was in favour of coal. Obviously, if that be so, then in the national interest the balance is all on one side, because there is no doubt that the coal industry is one which we must all desire to see in a very prosperous condition. There is no industry in the country—I will not say with a higher record of unemployment—in which unemployment on such a large scale is so concentrated as in the case of the coal industry. That is one of the difficulties which make the problem of dealing with unemployment derived from the coal mining industry specially difficult and complex to handle. I am sure that every Member of the Committee would desire to see the coal industry preferred, other things being equal, to a fuel which has to be imported from abroad.
We want to give as much employment as possible to our own people, and we particularly desire to find more employment in the case of coal which has been hit so hard for so many years. The actual advantage which has been derived by the coal industry in the very short time which has elapsed since the imposition
of the duty is not, I think, unsatisfactory, and I am now going to try and respond to the invitation of the hon. Member for East Wolverhampton, who with others criticised the tax last year and pointed out the awful lot of damage it was going to do, and review the situation in the light of my experience. As far as the coal industry is concerned, figures have been obtained to show that trade to the extent of nearly 378,000 tons has been regained from oil, and it is also claimed that a further 95,000 tons a year would have been lost to coal but for the tax. That is 473,000 tons, which represent work for about 2,000 miners, and in addition to that it is estimated that about 100,000 tons of coal oil, including creosote, have been sold, or contracted for instead of importing fuel oil for the purpose. A good deal better market has been secured for a lot of this coal oil in consequence of the duty, and the producers, instead of burning it in their furnaces, are now using a low grade coal in its place. This only refers to the first year, and it must be recollected that at the beginning of the year a number of contracts were in force which could not be put an end to immediately, but we already have evidence to show that, as these contracts come to an end, the gain to coal at the expense of oil is still further increased. The Mines Department has expressed the opinion that up to date the results on the whole must be considered highly satisfactory.
We were also given certain industries upon which it was said the tax would have a detrimental effect. There has been a considerable turnover to coal, coke or gas, with satisfactory results, in a large number of industries, including some of those which were specifically brought forward last year as evidence against the tax. Bakeries, industries dealing with food, laundries, textiles, engineering, metallurgy, glass, hotels, offices, hospitals and schools, have all turned over from oil to coal, and satisfactory accounts have been received of the results.
Last year the right hon. and gallant Member for Newcastle - under - Lyme (Colonel Wedgwood) was very strong on the subject of the irreparable damage which would he done to his industry by the tax, and it is interesting to observe that the exports of pottery manufactured
in Great Britain in the months May to April amounted in 1933–34 to 2,607,000 cwt., as against a smaller figure of 2,421,000 cwt. in the preceding year. It would appear in that case that in spite of the handicap under which the pottery trade was suffering it was still able to increase its exports as compared with the year before.
One firm of aluminium founders have converted their plant to use 800 tons of coke instead of 500 tons of oil per annum, another aluminium works have decided to replace oil by gas gradually during the next few months, which will increase the consumption of gas by 50,000,000 cubic feet per year, which is equivalent to 3,000 tons of coal. I remember another industry which was mentioned last year, the glass industry, upon which we had a long discussion. The United Glass Pottery Manufacturers, Limited, the largest users of oil, are now consuming coal for the production of gas at their works at the rate of 36,000 tons a year in place of imported oil. The Mines Department has had a conversation with representatives of the firm, who stated that they were satisfied that they could get as good results from the use of gas made on their premises as from oil. That is an instance which I would describe of a firm opposing the new imposition as long as there was any chance of avoiding it, but once it is imposed proceed to see how they can mitigate its effect. One hon. Member has dealt with the nut and bolt industry. I am informed that in that industry, and also in the enamel industry, gas is now superseding oil and giving satisfaction. Let me say a word about the metallurgical trades in the course of my review for the benefit of the hon. Member for East Wolverhampton (Mr. Mander). A firm of manufacturers say:
We were doubtful whether we could fire our furnaces at the high temperatures required satisfactorily with coal, but it has proved in practice to be quite successful few plant was installed as a result of the tax on oil fuel. Hitherto the plant was running on oil fuel, and the results have been entirely satisfactory; they have resulted in a considerable saving in the cost of fuel.
It has been reported to the Mines Department that one of the directors of this firm was a member of a deputation which called upon the Chancellor of the Exchequer to demand that he should remove the tax, but this director now says that
he wishes to thank the Chancellor of the Exchequer for putting the tax on as he finds that it has meant a saving in fuel costs.

Mr. LIDDALL: Can the right hon. Gentleman tell us the position of the manufacturers of oil engines in this country to-day?

Mr. CHAMBERLAIN: I am not an encyclopaedia on all the industries of the country, and I cannot at a moment's notice give particulars about the manufacture of oil engines, but my hon. Friend will no doubt remember that one of the reasons I gave for the imposition of the tax was that we must preserve some balance in our taxation system, that it was an anomaly to say that a particular kind of fuel should be exempt from taxation altogether. From the point of view of bringing in revenue, which was the third reason I gave, the tax has been highly satisfactory, and in view of a revenue of £2,800,000 as against an estimate of £2,000,000, whatever I said in favour of the tax last year the result of my review of the last 12 months is only to convince me that I did not say enough in its favour. It has done all I expected it to do, rather more in fact, and there is not the slightest justification for suggesting now that it should be reduced, much less abolished.

6.52 p.m.

Sir P. HARRIS: I did not gather whether the right hon. Gentleman was defending the high rate of this tax because it was a protection and stimulus to coal or on the basis of revenue. I suggest that if the rate of the duty were reduced, there would be some compensation by an increased consumption of the article. The right hon. Gentleman admitted that, in spite of the heavy tax, consumption is still going up. His figures prove that. In other words, there are still hundreds of industries in this country which, owing to special circumstances, are compelled to use oil instead of the cheaper, the untaxed commodity, coal. He put in a strong appeal for coal, and, naturally it is a strong appeal. There is no industry which has gone through a more serious time, with more unemployment, more reduction of capital values, than the coal industry, and it must necessarily make a strong appeal to the Com-
mittee. But coal is an old fuel and has had a big start on oil. It is available in the country, and our industries were founded and based on the use of coal. Oil was only introduced as a necessity in order to compete with foreign countries. The right hon. Gentleman paid me the compliment, which I very much appreciate, of quoting me in his speech on the Second Reading of the Finance Bill. I did not know that he took the trouble to remember anything I said. He quoted me as saying that there was only one real remedy for unemployment and that was a revival of trade and getting people back into industry. That is a truism, and I do not think it was necessary for the right hon. Gentleman to search the pages of the OFFICIAL REPORT in order to get inspiration for such an obvious remark.
What is the position of this country at the moment? There is no real remedy for the great army of unemployed except a revival of trade. In his Budget speech the right hon. Gentleman pointed out that any chance of a revival of trade in this country must be looked for in our export trade; that largely the home demand was being satisfied and that if we are to get more people into our workshops and factories, and our industries working full time, we must look to the world markets. Anybody connected with our foreign trade knows the severe competition which exporters in this country have to face. It is keen, new countries are coming in, new plant, new machinery, new methods, new ideas and new organisations, are being introduced, and it is essential that our industries should be established on the best possible basis, and be able to get the advantage of the latest machinery, the newest methods and, most important of all, the most economical fuel. The right hon. Gentleman took pains to prove that the glass industry, pottery and textiles had substituted coal for oil. Why? Not because it is more efficient or more economical but because he himself has interfered, by putting his clumsy hands on their plant, imposing a tax and forcing them to use something less efficient for their purpose. It may be that in our complicated industrial system some trades will not suffer and there may be examples that the coal industry, stimulated by competition, has introduced machinery which use coal as efficiently as gas, but I think
the right hon. Gentleman will be the first to admit that with a highly organised industrial country like ours, with so many kinds of industries, you are going to handicap some trades by putting a tax upon what they have found to be the best and most economical fuel for the running of their factories.
We are not asking for anything unreasonable. It is not possible to change suddenly from one form of fuel to another, and all we are asking is that as coal has had this 12 months' premium, the tax should not be abolished but reduced to a more reasonable level. I wonder what would have been the fate of this country in the 19th century if we had had a Chancellor of the Exchequer with the principles, views and ideas of the right hon. Gentleman. What an outcry there would have been when steam was introduced. With the weavers calling for the destruction of steam plant and for hand looms to be retained the right hon. Gentleman would have come along and protected the hand-loom weavers by putting a tax on coal. The same thing would have happened when steam was substituted for water power. Now, when certain industries have found that oil is the most efficient for their purpose, the Chancellor of the Exchequer comes along and interferes with the progress of industry and scientific experiments, and tries to handicap our manufacturers in their competition with the rest of the world. I suggest that he should study my speeches again. If he has profited from a study of them a year ago, he may get wisdom by studying them in 1934.

Question put, "That the Clause be read a Second time."

The CHAIRMAN (Sir DENNIS HERBERT) collected the voices, and declared that the Noes had it.

Sir ROBERT HAMILTON: On a point of Order. May I point out, Sir Dennis, that directly you put the Question I shouted "Aye"?

The CHAIRMAN: It is perfectly certain there was no "Aye" response in time. I paused and I did not hear a sound. After having put the Question to the "Ayes," I put the question to the "Noes." I collected the voices, and I had done so before any protest was made at all.

Sir P. HARRIS: Might I ask your indulgence? We did call out. It would be a great concession to us to divide.

Sir A. SINCLAIR: Some of us really did say "Aye." We did intend to divide.

The CHAIRMAN: I am very sorry to put any party in an awkward position, but I think the Committee generally will be with me when I say that nobody shouted out, and, if they did, it did not reach the Table. If it is the general sense of the Committee that some indulgence should be given, I will put the Question a second time.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 30; Noes, 282.

Division No. 282.]
AYES.
[7.3 p.m.


Banfield, John William
Jones, J. J. (West Ham, Silvertown)
Salter, Dr. Alfred


Dobbie, William
Kirkwood, David
Sinclair, Maj. Rt. Hn. Sir A. (C'thness)


Evans, David Owen (Cardigan)
Leonard, William
Strickland, Captain W. F.


George, Megan A. Lloyd (Anglesea)
McGovern, John
Thorne, William James


Gardner, Benjamin Walter
Maclean, Nell (Glasgow, Govan)
West, F. R.


Griffith, F. Kingsley (Middlesbro', W.)
Mallalieu, Edward Lancelot
White, Henry Graham


Groves, Thomas E.
Mander, Geoffrey le M.
Wilmot, John


Hamilton, Sir R.W. (Orkney & Z'tl'nd)
Mason, David M. (Edinburgh, E.)
Young, Ernest J. (Middlesbrough, E.)


Harris, Sir Percy
Milner, Major James



Holdsworth, Herbert
Nathan, Major H. L.
TELLERS FOR THE AYES.—


Jones, Henry Haydn (Merioneth)
Owen, Major Goronwy
Mr. Walter Rea and Mr. Harcourt




Johnstone.


NOES.


Acland-Troyte, Lieut.-Colonel
Atholl, Duchess of
Beaumont, Hon. R.E.B. (Portsm'th, C.)


Adams, Samuel Vyvyan T. (Leeds, W.)
Balllie, Sir Adrian W. M.
Bell, Sir Alfred L.


Agnew, Lieut.-Com. P. G.
Baldwin, Rt. Hon. Stanley
Blindell, James


Allen, Sir J. Sandeman (Llverp'l, W.)
Balfour, Capt. Harold (I. of Thanet)
Borodele, Viscount


Allen, Lt.-Col. J. Sandeman (B'k'nhd.)
Balniel, Lord
Bossom, A. C.


Allen, William (Stoke-on-Trent)
Banks, Sir Reginald Mitchell
Boulton, W. W.


Anstruther-Gray, W. J.
Barclay-Harvey, C. M.
Bower, Lieut.-Com. Robert Tatton


Applin, Lieut.-Col. Reginald V. K.
Beauchamp, Sir Brograve Campbell
Bowyer, Capt. Sir George E. W.


Aske, Sir Robert William
Beaumont, M. W. (Bucks., Aylesbury)
Bracken, Brendan


Bralthwalte, J. G. (Hillsborough)
Hellgers, Captain F. F. A.
Ramsay, Capt. A. H. M. (Midlothian)


Brats, Captain Sir William
Heneage, Lieut.-Colonel Arthur P.
Ramsden, Sir Eugene


Broadbent, Colonel John
Hepworth, Joseph
Ray, Sir William


Brocklebank, C. E. R.
Hills, Major Rt. Hon. John Waller
Reed, Arthur C. (Exeter)


Brown, C. W. E. (Notts., Mansfield)
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Reid, Capt. A. Cunningham.


Brown, Col. D. C. (N'th'l'd., Hexham)
Hore-Belisha, Leslie
Reid, William Allan (Derby)


Brown, Brig. -Gen. H.C. (Berks., Newb'y)
Hornby, Frank
Remer, John R.


Buchan-Hepburn, p. G. T.
Horsbrugh, Florence
Rickards, George William


Burnett, John George
Howard, Tom Forrest
Roberts, Sir Samuel (Ecclesall)


Burton, Colonel Henry Walter
Howitt, Dr. Allred B.
Ropner, Colonel L.


Butt, Sir Alfred
Hudson, Capt. A. U. M. (Hackney, N.)
Rosbotham, Sir Thomas


Campbell, Sir Edward Taswell (Brmly)
Hudson, Robert Spear (Southport)
Ross Taylor, Walter (Woodbridge)


Campbell-Johnston, Malcolm
Hume, Sir George Hopwood
Ruggies-Brise, Colonel E. A.


Cape, Thomas
Hunter, Dr. Joseph (Dumfries)
Runge, Norah Cecil


Caporn, Arthur Cecil
Hunter, Capt. M. J. (Brigg)
Russell, Albert (Kirkcaldy)


Carver, Major William H.
Kurd, Sir Percy
Russell, Alexander West (Tynemouth)


Cayzer, Sir Charles (Chester, City)
Hutchison, W. D. (Essex, Romf'd)
Russell, Hamer Field (Sheffield, B'tside)


Cayzer, Maj. Sir H. R. (Prtsmth., S.)
Inskip, Rt. Hon. Sir Thomas W. H.
Rutherford, John (Edmonton)


Cazalet, Thelma (Islington, E.)
Jackson, Sir Henry (Wandsworth, C.)
Rutherford, Sir John Hugo (Liverp'l)


Cazalet, Capt. V. A. (Chippenham)
James, Wing-Com. A. W. H.
Salmon, Sir Isidore


Chamberlain, Rt. Hon. N. (Edgbaston)
Jameson, Douglas
Salt, Edward W.


Churchill, Rt. Hon. Winston Spencer
Jenkins, Sir William
Samuel, Sir Arthur Michael (F'nham)


Clarry, Reginald George
Jesson, Major Thomas E.
Sandeman, Sir A. N. Stewart


Clayton, Sir Christopher
John, William
Sassoon, Rt. Hon. Sir Philip A. G. D.


Clydesdale, Marquess of
Jones, Lewis (Swansea, West)
Savery, Samuel Servington


Cobb, Sir Cyril
Ker, J. Campbell
Scone, Lord


Cochrane, Commander Hon. A. D.
Kerr, Lieut.-Col. Charles (Montrose)
Selley, Harry R.


Cocks, Frederick Seymour
Kerr, Hamilton W.
Shaw, Helen B. (Lanark, Bothwell)


Colfox, Major William Philip
Kimball, Lawrence
Shaw, Captain William T. (Forfar)


Cook, Thomas A.
Lamb, Sir Joseph Quinton
Smiles, Lieut.-Col. Sir Walter D.


Cooper, A. Duff
Lambert, Rt. Hon. George
Smith, Louis W. (Sheffield, Hallam)


Copeland, Ida
Latham, Sir Herbert Paul
Smith, Sir Robert (Ab'd'n & K'dine, C.)


Courthope, Colonel Sir George L.
Law, Sir Alfred
Smithers, Sir Waldron


Craddock, Sir Reginald Henry
Law, Richard K. (Hull, S. W.)
Somerset, Thomas


Cranborne, Viscount
Lees-Jones, John
Somerville, Annesley A. (Windsor)


Crooke, J. Smedley
Lennox-Boyd, A. T.
Somerville, D. G. (Willesden, East)


Crookshank, Capt. H. C. (Gainsb'ro)
Liddall, Walter S.
Soper, Richard


Cross, R. H.
Little, Graham-, Sir Ernest
Southby, Commander Archibald R. J.


Daggar, George
Lockwood, John C. (Hackney, C.)
Spencer, Captain Richard A.


Dalkeith, Earl of
Lockwood, Capt. J. H. (Shipley)
Spens, William Patrick


Davies, Edward C. (Montgomery)
Loder, Captain J. de Vere
Stanley, Rt. Hon. Lord (Fylde)


Davies, David L. (Pontypridd)
Loftus, Pierce C.
Stanley, Hon. O. F. G. (Westmorland)


Davies, Maj. Geo.F. (Somerset, Yeovil)
Lovat-Fraser, James Alexander
Stewart, J. H. (Fife, E.)


Denville, Alfred
Lumley, Captain Lawrence R.
Stones, James


Dickle, John P.
Lyons, Abraham Montagu
Storey, Samuel


Dixon, Rt. Hon. Herbert
MacAndrew, Capt. J. O. (Ayr)
Stourton, Hon. John J.


Drewe, Cedric
Macdonald, Gordon (Ince)
Strauss, Edward A.


Drummond-Wolff, H. M. C.
Macdonald, Sir Murdoch (Inverness)
Stuart, Hon. J. (Moray and Nairn)


Duckworth, George A. V.
Macdonald, Capt. P. D. (l. of W.)
Sueter, Rear-Admiral Sir Murray F.


Duggan, Hubert John
McKie, John Hamilton
Sugden, Sir Wilfrid Hart


Duncan, James A. L. (Kensington, N.)
McLean, Major Sir Alan
Tate, Mavis Constance


Eady, George H.
McLean, Dr. W. H. (Tradeston)
Templeton, William P.


Eales, John Frederick
Macquisten, Frederick Alexander
Thomas, Major L. B. (King's Norton)


Edmondson, Major Sir James
Mainwaring, William Henry
Thompson, Sir Luke


Edwards, Charles
Manningham-Buller, Lt.-Col. Sir M.
Thomson, Sir Frederick Charles


Ellis, Sir R. Geoffrey
Margesson, Capt. Rt. Hon. H. D. R.
Thorp, Linton Theodore


Elliston, Captain George Sampson
Mason, Col. Glyn K. (Croydon, N.)
Tinker, John Joseph


Elmley, Viscount
Mayhew, Lieut.-Colonel John
Todd, Capt. A. J. K. (B'wick-on-T.)


Emmott, Charles E. G. C.
Mills, Major J. D. (New Forest)
Touche, Gordon Cosmo


Emrys-Evans, P. V.
Milne, Charles
Train, John


Entwistle, Cyril Fullard
Monsell, Rt. Hon. Sir B. Eyres
Tryon, Rt. Hon. George Clement


Essenhigh, Reginald Clare
Moreing, Adrian C.
Tufnell, Lieut.-Commander R. L.


Evans, Capt. Arthur (Cardiff, S.)
Morrison, G. A. (Scottish Univer'ties)
Turton, Robert Hugh


Fox, Sir Gilford
Morrison, William Shepherd
Ward, Irene Mary Bewick (Wallsend)


Fremantle, Sir Francis
Munro, Patrick
Ward, Sarah Adelaide (Cannock)


Ganzonl, Sir John
Nicholson, Godfrey (Morpeth)
Wardlaw-Mline, Sir John S.


Gillett, Sir George Masterman
Nicholson, Rt. Hn. W. G. (Peterst'ld)
Warrender, Sir Victor A. G.


Gilmour, Lt.-Col. Rt. Hon. Sir John
Normand, Rt. Hon. Wilfrid
Waterhouse, Captain Charles


Gluckstein, Louis Halle
O'Connor, Terence James
Wayland, Sir William A


Goff, Sir Park
O'Neill, Rt. Hon. Sir Hugh
Wedderburn, Henry James Scrymgeour.


Grattan-Doyle, Sir Nicholas
Ormsby-Gore, Rt. Hon. William G. A.
Wells, Sydney Richard


Greaves-Lord, Sir Walter
Peake, Captain Osbert
Whyte, Jardine Bell


Griffiths, George A. (Yorks, W. Riding)
Pearson, William G.
Williams, David (Swansea, East)


Griffiths, T. (Monmouth, Pontypool)
Penny, Sir George
Williams, Dr. John H. (Llanelly)


Grimston, R. V.
Perkins, Walter R. D.
Wills, Wilfrid D.


Gritten, W. G. Howard
Petherick, M.
Wilson, Clyde T. (West Toxteth)


Grunay, Thomas W.
Peto, Sir Basil E. (Devon, Barnstaple)
Windsor-Clive, Lieut.-Colonel George


Guinness, Thomas L. E. B.
Peto, Geoffrey K. (W'verh'pt'n, Bliston)
Winterton, Rt. Hon. Earl


Gunston, Captain D. W.
Pike, Cecil F.
Wise, Alfred R.


Guy, J. C. Morrison
Potter, John
Withers, Sir John James


Hacking, Rt. Hon. Douglas H.
Powell, Lieut.-Col. Evelyn G. H.
Womersley, Sir Walter


Hales, Harold K.
Pownall, Sir Assheton
Worthington, Dr. John V.


Hamilton, Sir George (Ilford)
Procter, Major Henry Adam



Hanley, Dennis A.
Pybus, Sir Percy John
TELLERS FOR THE NOES—


Hartington, Marquess of
Radford, E. A.
Dr. Morris-Jones and Lieut.-Colonel


Haslam, Sir John (Bolton)
Raikes, Henry V. A. M.
Sir A. Lambert Ward.


Bill read a Second time, and committed to a Standing Committee.

NEW CLAUSE.—(Provision for seven-day licences for showmen's vehicles.)

A licence for vehicles registered under the Roads Act, 1920, in the name of a person following the business of a travelling showman and used solely by him for the purposes of his business and for no other purpose may be taken out for a period of seven days, and the duty payable upon such licence shall be one fifty-second part of the annual rate of duty thereon with an addition of fifteen per centum upon the said one fifty-second part.—[Mr. Groves.]

Brought up, and read the First time.

Mr. GROVES: I beg to move, "That the Clause be read a Second time."
Years ago I had the pleasure of thanking the Minister for a concession to this group of industries, which took the form of an application for a seven-day licence limited to goods vehicles unladen the weight of which is 11 tons. On the back of the application form for a seven-day licence issued under the Roads Act, 1920, for a mechanically propelled goods vehicle, it is stated:
Seven-day licences are issued on payment of one fifty-second of the annual rate of duty with an addition of 10 per cent. for vehicles exceeding 11 tons in weight, unladen, changeable with duty under paragraph 5 of the Second Schedule to the Finance Act, 1920, as amended by the Finance Act, 1933.
The form goes on to give details of the group of vehicles to which this proposed concession applies. There is the agricultural goods vehicles, and then the showmen's special goods vehicles. My own view is that it was the intention of the Government at that time to apply this concession to showmen. May I put it that arrangements have been so drawn that the Department did not seem to realise that showmen have no vehicles that would come within the category of the Schedule to which I have referred? Showmen of the country are a very small group of honest, hardworking people, and they do not in this country use or own one petrol vehicle exceeding 11 tons in weight. I have the figures before me in case the Minister is not apprised of the details. There are 789 vehicles licensed and owned by showmen of the country, nine up to one ton, 39 up to two tons, 145 up to three tons, 345 up to four tons, 210 up to five tons, and 41 between five and six tons, a total of 789 vehicles. I have in my mind the idea that it was the desire and intention of the Minister to give these vehicles the
benefit of this proposed concession, and the only point that excludes them is that they must exceed 11 tons in weight. I do wish to impress on the Minister of Transport the real feeling that the people engaged in this industry have for a long time felt the severe depression, which has affected the entertainments industry and amusements generally in this country.
We are all aware that these folk are receiving less income and ought not to have imposed upon them increased obligations. There is one point in connection with these travelling showmen which I hope the Committee will bear in mind as showing that the vehicles owned and used by the showmen come within the category of special vehicles. These vehicles must, by Act of Parliament, conform to certain special standards and requirements and could not be used as ordinary haulage vehicles. Many years ago showmen used to travel about the country with horse-drawn vehicles but the change in road construction and the development in the use of the motor has compelled them to use highly taxed vehicles and they have been treated in that respect on a common basis with the general hauliers of the country. Yet the showman on the average only uses his vehicle on the road to cover about 500 miles per year. I think this is a new Clause which the Government ought to accept. I feel a little disappointed that the Chancellor of the Exchequer is no longer in his place but we have always received from the Minister of Transport courtesy and consideration and I would appeal to him to grant this concession. I ask him to remember that these vehicles can only be used for purposes appertaining to the showmen's industry and not for general purposes. Some of them are utilised on fair grounds for the generation of electricity and the Government get a fair return from the petrol which is used in that way. On these grounds I ask the hon. Gentleman to give this Clause his consideration.

7.17 p.m.

The MINISTER of TRANSPORT (Mr. Oliver Stanley): The hon. Member's historical survey of the taxation of these vehicles was not quite correct. The change which was made during the passage of the Finance Act of last year and which is the cause of the document just read to the Committee by him, was not made with particular reference to
showmen's vehicles or with any consideration for their particular claim. It was a general concession in respect of goods-carrying vehicles exceeding 11 tons unladen weight. Vehicles of that kind have to be run under very special restrictions. The owners have to notify beforehand the local authorities through whose territories the vehicles are to pass and they have to be guided by those local authorities as to the times at which they will complete journeys, and the movements which they are to make. It was pointed out and I felt with considerable force that the vehicles were largely used for special jobs, that they were not on the road every day like ordinary lorries and that, in their case, it was equitable that this special concession should be given which was given in respect of no other class of vehicles, enabling a licence to be taken out for a period of seven days instead of for a quarter. Showmen's vehicles, incidentally, should there be any exceeding 11 tons, would share in that concession equally with any other class of goods-carrying vehicles but I would remind the hon. Member opposite that this was never proposed as a concession to showmen's vehicles. It was a concession in respect of heavy goods-carrying vehicles, whatever the class.
The Committee, I am sure, would like to see the most sympathetic treatment possible accorded to the showmen of this country. In the competition between British showmen and Hollywood films I feel sure the sympathy of the Committee is all on one side. In considering the new schedule of taxation for goods vehicles last year I did give the most careful consideration to the case of the showmen. They had a good case on the ground of principle, that is to say, their user of the road is undoubtedly less, and therefore the damage which they do to the roads smaller than that of other vehicles of the same weight. They also had a good case on the question of sentiment, and we strained every point we could in order to help them. The result was that in the new scale of taxation, which imposed upon other commercial vehicles very heavy increases, in the case of the showmen there were some instances in which their taxation was actually reduced, and in no case of vehicles under three tons was there any increase in the taxation which had to be paid. Moreover,
during the passage of the Finance Act through this House in response to an appeal from the hon. Member opposite I made a further concession on the trailer duty which showmen had to pay.
I feel, therefore, that the case of the showmen has received every possible consideration, and I am afraid that I could not possibly justify the extension of the privilege of the seven-day licence to them. If it were to be given in respect of showmen's vehicles there are many other classes of vehicle owners who would feel themselves equally entitled to such a concession. There has been, as a matter of fact, an application from the representatives of the motor industry as a whole for the provision of these licences. I went carefully into the matter, and I found that the proposal was, from my point of view, impracticable. I have done something to meet the case by the abolition in this Finance Bill of the surrender fee, which means that it is possible, by surrendering your licence, without having to pay a surrender fee to obtain what is in fact a one month's licence. The fact that the showman does not make regular and continuous use of his vehicles on the road was fully considered in fixing the reduced scale of taxation which they now have to pay, and although in common with other Members of the Committee I have the greatest sympathy with these people, I feel that in the scale adopted last year we have gone as far as possible to meet their special case.

7.22 p.m.

Mr. GROVES: As I have said already, the Minister is always very courteous and considerate when we put a case of this kind before him and I would only ask him to give his attention to one special point, which has been brought to my notice. It relates to the difficulty in which showmen may be placed when they have to move, say, on the last day of February and the first day of March. They have to pay for two licences when they are compelled to move on two days coming at the beginning or at the end of the period although their vehicles may not have been in use during the period as far as road haulage is concerned. Perhaps the Minister would consider later the fact that fairs throughout the country are held upon precise and specific dates and that showmen may have to move in on the last day of one month and the
first day of the succeeding month. My experience is that if the Minister promises to consider a case he meets it fairly and I merely ask him to consider that specific point.

Mr. STANLEY: Perhaps the hon. Member would take another opportunity of bringing the details to my notice.

Mr. GROVES: In that case, I do not press my proposal, and I beg to ask leave to withdraw.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Amendment of 54 and 55 Vic., First Schedule.)

The Stamp Duty chargeable under the Stamp Act, 1891, on bills of exchange of any kind whatsoever (except bank notes) and promissory notes of any kind whatsoever (except bank notes) drawn or expressed to be payable or actually paid or endorsed or in any manner negotiated in the United Kingdom shall be twopence in lieu of the duty now chargeable thereon and the rates of duty specified to be paid on such bills of exchange and such promissory notes in the First Schedule to the said Act shall cease to have effect.—[Mr. Petherick.]

Brought up, and read the First time.

7.25 p.m.

Mr. PETHERICK: I beg to move, "That the Clause be read a Second time."

The new Clause proposes to amend the Stamp Act, 1891, under which a certain schedule of stamp duties on bills of exchange is laid down. The new Clause applies only to bills of exchange and not to other negotiable instruments on which stamp duty has to be paid and its object is to reduce the scale of duty on those bills of exchange to a uniform rate of 2d. The present position is that ordinary bills of exchange, sight bills, or three days' sight bills, do pay 2d., but bills drawn for one month, three months or six months come under the schedule laid down in the Act of 1891. That schedule approximately fixes the stamp duty at 1s. for every £100 of bill drawn. Supposing a manufacturer were selling £1,000,000 worth of machinery and giving a year's credit the stamp duty under that schedule would amount to a very large sum. I agree that £1,000,000 is a large sum and that that is the kind of sale which everybody would like to make, but it is an easy sum for the purposes of an illustration. Supposing that
in such a case the manufacturer is financing that transaction for the period of a year by means of four three-months' bills, one bill drawn when the machinery is delivered and three renewals, it will cost him no less than £2,000 in Stamp Duty. That is a very large sum, but it illustrates a state of things which affects, in larger or smaller degree, practically every manufacturer or trader in the country who has to give credits of that description.

This form of stamp duty to my mind is rather vicious for various reasons. First, it is a turnover tax on movements of goods, and where one can possibly avoid a turnover tax it is advisable to do so. It differs from stamp duty on Stock Exchange transactions, because in the latter case you are merely dealing with movements of ownership but in the other case you are taxing the definite movement of goods into consumption. Secondly, it is a definite burden on industry. In a case such as I have mentioned the £2,000 stamp duty might make all the difference in regard to an order obtained in competition with foreign countries and would considerably reduce the profit of the manufacturer. The third point which I wish to make in objection to this form of taxation is, that if I am selling any form of goods and am getting paid in cash, all that I have to pay is the 2d. for a formal receipt. If, on the other hand, I am giving credit for three months and drawing a bill, I am taking a risk; and it is a very curious thing that in the latter case I am paying a very much heavier stamp duty than if I am paying cash.

There is the question, of course, of the cost, which is very important, and it is a little difficult to make oneself clear on this point, because there is a rather odd difference in Governmental interpretation as between inland and foreign bills. The ordinary commercial understanding of the expression "inland bill" is a bill with two or more English names on it, and a foreign bill is either a bill with two or more foreign names on it or a bill with one English name and one foreign name, but the Governmental interpretation, the ordinary interpretation, for instance, in the Report of the Commissioners of Inland Revenue, is somewhat different. There the term "inland bill" means a bill drawn in the United Kingdom, and
a foreign bill means a bill drawn out of the United Kingdom, even if drawn on foreigners. In assessing the cost of this Clause, if accepted, one has to look to the Report of the Commissioners of Inland Revenue, and one finds that it will cost, as regards inland bills, based on 1932–3, an amount of £222,000 in loss to the Exchequer, less, of course, the amount that they will get in 2d. stamps on every bill. For the preceding years it is actually rather more.

But when you come to assessing the cost of the foreign bills, it is extremely difficult to find out exactly what it would be, for this reason, that owing to the accepted definition for the purpose of the Inland Revenue Commissioners and such like, in the expression "foreign bills" and in the amounts returnable from the proceeds of the Stamp Duty on foreign bills are included not only bills drawn by foreigners on foreigners, but bills drawn by foreigners on the United Kingdom. Bills drawn by foreigners on foreigners come under a different category, because under the Finance Act of 1899 they were allowed to pay a cheaper rate of Stamp Duty. Why, I do not know, because it seems very odd to encourage the inflow into this country of foreign bills to be discounted on the London bill market and consequently to use funds which might normally be used properly for the financing of purely English trade. Therefore, I think it would undoubtedly cost something very close to the amount mentioned in the Report of the Commissioners of Inland Revenue, namely, £222,000, for inland bills, and something like £200,000—perhaps a little more or perhaps a little less—for foreign bills. I quite realise that this is a considerable amount, which may well make the Treasury very chary of considering the Clause, but at the same time I hope my hon. Friend the Financial Secretary to the Treasury, if he says it is impossible to make a concession now, will at least recognise the illogicality of the present tax on bills of exchange and admit the fact that, although it has been established for the last 40 years, it is at least rather an unsound tax and should be amended as soon as funds permit.

7.36 p.m.

Sir WILLIAM WAYLAND: I should like to support this Clause, especially in
regard to foreign bills. There are traders in this country who do what I might call a large small business in foreign countries, and the method of payment is almost invariably by bills. In these times, when competition is very keen and profits are very small, it would certainly be a help if the Stamp Duty on the foreign bill, the bill that we draw upon the foreigner for the amount of our invoices, could be reduced. In all foreign and Dominion cases I think 1d. would be quite sufficient in place of 1s. per £100, and it would certainly help in that respect.

7.37 p.m.

Mr. HORE-BELISHA: The effect of this Clause would be to make the Stamp Duty on these bills a fixed duty of 2d., like the duty on cheques, instead of an ad valorem duty of 1s. per £100. The cost of accepting the Clause would be, it is estimated, £440,000 per annum, and I am sure that my hon. Friend, sincere as he was in moving it, would hardly expect it to be accepted, whatever its merits might be. I am sure the Committee listened with very great attention to all that he had to say, but I did not gather from his remarks that he was suggesting that the present duty on bills was responsible for any decline in their use. Had he made that case, I should have been prepared to answer him, because it is obvious that a duty of 4s. per cent. per annum cannot have very serious adverse effects.

Mr. PETHERICK: I do not understand what the hon. Gentleman means by saying 4s. per cent. per annum. It is not a case of per annum, because the Stamp Duty is on each bill and has nothing to do with per annum. If you draw a bill for a month, it is an actual duty.

Mr. HORE-BELISHA: I am assuming that the average term of a bill is put at three months, and I am giving my hon. Friend thereby the benefit of a higher figure. If, as I say, he were making any suggestion that the duty was having a restrictive effect upon these bills, I should have been prepared to answer him.

Sir STAFFORD CRIPPS: But he is not.

Mr. MACQUISTEN: Many times questions have been raised as to the diminution in the use of inland bills of exchange.

Mr. HORE-BELISHA: If one looks at the figures, the yield of the duty in 1928–9 was £395,260 on inland bills, whereas it has only fallen to-day to £217,000, and the yield on foreign bills has fallen from over £1,000,000 to £267,000, showing clearly that it is a decline in foreign trade; but, as I say, there has been no public demand for this Clause, though we were very interested to hear what the hon. Gentleman had to say, and if he desires to bring any further point to our notice later, we shall always be prepared to consider it. We do, however, await some more obvious public demand for a change of this kind, which would involve the Exchequer in so large a sum of money.

7.40 p.m.

Mr. PETHERICK: I was interested in my hon. Friend's remarks, but if the Government are always going to rely on the principle of waiting for a large public demand before actually taking steps to remedy any injustice, it seems to me that you are opening the door to very extraordinary happenings. The amount involved is, I quite recognise, such that the acceptance of this Clause would have to be taken into very serious consideration by the Treasury at this moment, but I hope the hon. Member will consider it between now and next year. I beg to ask leave, however, to withdraw my Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Temporary amendment of Rule 8 of No. V of Schedule A of the Income Tax Act, 1918.)

For the two financial years ending on the fifth day of April, nineteen hundred and thirty-five, and the fifth day of April, nineteen hundred and thirty-six, respectively, paragraph (2) of Rule 8 of No. V of Schedule A of the Income Tax Act, 1918, as amended by Section twenty-five of the Finance Act, 1924, shall have effect as if the words "and in so far as they are made in order to comply with the provisions of any statute or the regulations or bye-laws of a local authority" were omitted therefrom.—[Mr. Turton.]

Brought up, and read the First time.

7.42 p.m.

Mr. TURTON: I beg to move, "That the Clause be read a Second time."
The effect of this Clause would be to alter Rule 8 of No. V of Schedule "A" of the Income Tax Act, 1918, so as to widen the definition of maintenance, and if the Clause were carried, the effect
would be that in certain cases owners of property would gain a reduction of assessment if they undertook certain works. My hon. Friend the Financial Secretary to the Treasury, in dealing with the last Clause, said there had never been any public demand for it, and I think I had better go back in history and see what the public demand has been for this particular Clause. In 1918 the Income Tax Act defined the term "maintenance" as including:
the replacement of farmhouses, farm buildings, cottages, fences, and other works where the replacement is necessary to maintain the existing rent.
That was an awkward provision that worked badly, because the owner of property might well want not merely to replace what he had before, but to improve it, from the point of view either of health or of the commercial advantages of the agricultural buildings. The right hon. Member for Tonbridge (Lieut.-Colonel Spender-Clay) moved an Amendment in the 1924 Parliament in the exact terms of my proposed new Clause, and the then Chancellor of the Exchequer, Lord Snowden, did not accept it on the Committee stage, but on the Report stage undertook to meet it; and he tried to meet it in this way. He added to that definition that the term "maintenance" should also include:
additions or improvements to farmhouses and buildings in so far as they are made in order to comply with the conditions of any Statute or the regulations or by-laws of any local authority.
That, I submit, was a bad Amendment, not only because it was proposed by Lord Snowden, but also because it worked injustices, and those injustices were foreseen at the time by, I believe, nearly every Member of the National Government sitting on these benches to-day. For instance, the present Chancellor of the Exchequer, speaking in favour of the very new Clause that I am proposing, said he thought it could be adopted and that there was a real grievance to be remedied. When, on the Report stage, Lord Snowden introduced his present wording that I am asking the Committee to leave out, the present Chancellor of the Exchequer said:
Lord Snowden is not giving words in conformity with the undertaking given on the Committee Stage. The difference is that the Chancellor of the Exchequer (Lord Snowden) by his proposed Clause is limiting the concession to those cases only
where the additions or improvements are made necessary in order to comply with Parliamentary or local Statutes or regulations. There was no such limitation in the Clause as moved on the Committee stage, and therefore as the Chancellor of the Exchequer admits that was the understanding in his own mind at the time, I think it would be fairer to go a little further than the Clause which the Chancellor of the Exchequer has now put forward."—(OFFICIAL REPORT, 15th July, 1924; cols. 243–4, Vol. 176.]
What I am asking the Committee to do is what Lord 'Snowden failed to do in 1924. I believe there is good reason for the change. Let me put two positions to the Committee. I will take first the case of a farm owner who wants to add to the farm buildings. If he wants to add to the farm buildings, even although it must be a condition that he does not increase the rent, he will not get the advantage of the Act unless he is complying with the provisions of a Statute or local bye-law. If, for instance, under the Milk and Dairies Order he alters and improves his cowshed, he will get advantage, but if he does anything to his pig-sty he gets no advantage and can claim no relief. Let me take another case. There are different by-laws in different parts of the country. In one district of which I have knowledge there is a by-law which says that every house shall have a cesspool. A neighbouring locality has no such local by-law. If a landlord in district A wishes to put in a cesspool he can include it in his maintenance scheme, but if a landlord in district B puts in a cesspool he gets no relief. I do not think the Committee will regard that as a satisfactory state of affairs.
We want a much wider term. This is a matter of urgent importance, because it will provide labour, if you allow the owners of property to get relief by carrying out improvements. The present law is really in effect benefiting the bad landlord against the good landlord, benefiting the man who has not carried out necessary sanitary improvements, especially a water supply at the present time, the man who is forced by a Government Department or by local by-laws, as against the man who is carrying out sanitary improvements, which we all regard as satisfactory. There is throughout the country a great need for water supply. To some extent the Government have met that need by the Rural Water Supply Bill. If
a landlord wants to carry out such work voluntarily he does not get the relief that he would get under, this new Clause.
There is one further aspect of the question which I would like to emphasise, and that is the question of the pig scheme. We have a pig marketing scheme which is of considerable importance to the whole economics of the countryside, but only the large farmers are to-day taking advantage of that scheme. The smaller farmer or the small man in his cottage has not the necessary accommodation for his pigs. One reason why I would like the new Clause to be accepted is that if the owner of property put in new pig-stys, on the understanding that he did not charge any extra rent, he would gain the advantage of including the cost in his maintenance scheme. Under my Clause if he did make an increase of rent he would lose that advantage. Therefore, the effect would be that the cottage holder would have an incentive to go in for pigs, and the landlord would have an incentive to build stys for him, while the economic advantage of rent increase would not result.
When I suggest this change it may be asked why I have put it in the form of a temporary provision. The new Clause is only to apply to the two financial years ending the 5th day of April, 1935, and the 5th day of April, 1936. My reason for doing that is that I regard the employment question on the countryside of far more importance than any other factor that I have mentioned. It is in the rural districts where you have the lad in employment, especially in the building industry. For that reason I want to give this temporary incentive. If you give it for two years it will mean that all the owners will rush to take advantage of the provision and the result will be reflected in a higher degree of employment for those who are erecting new agricultural buildings or houses, thereby engaging manual labour, or in providing water supplies and cesspools. When the right hon. Member for Tonbridge moved the Clause in 1924 the numbers of the unemployed in the building industry were 59,000. Last month the figures were 152,000. Therefore, there is three tinges the argument to-day for making the change than there was when the proposal was made in 1924.
The Government by their housing policy have made a great alteration in
the numbers of unemployed in the building industry. If we only go back to last December, the numbers of the unemployed were then 220,000, but in the intervening months 70,000 more men have been put into employment in the building industry. That means that there may be still 150,000 unemployed. If we investigate the figures of this unemployment in the building industry compared with 1924 we shall find that the great proportion of them are in the rural areas. The Government are achieving great things with their slum clearance scheme, but they are not really touching the problem of rural housing.
It is said that people do not want to live in the country. That is because they have not the amenities in the country that they have in the towns. If we can get owners to improve their property, whether on sanitary lines or by adding rooms, then we shall retain a greater proportion of people on the countryside. It is for these reasons that I would ask the Committee and the Financial Secretary to accept the new Clause. I believe the cost of it would be offset by the increase in employment that it would give, and also by the increase in the Income Tax assessment occasioned by the improvements. I believe that it would be doing work of very considerable value to the pig policy of the Government, and also in retaining on the countryside a greater number of men and women. If hon. Members will look at the census returns for 1931 they will be appalled at what has happened in England in the last 10 years. People have been sweeping into the towns and deserting the countryside. I know one village where to-day there are only four houses, whereas in 1800 there were 40. That sort of thing is going on all over the country. On these grounds, I ask the Committee to accept the new Clause.

7.54 p.m.

Mr. HORE-BELISHA: Under the existing law agricultural landowners already receive preferential treatment compared with other property owners, in that they include in maintenance claims certain capital expenditure upon improvements to farm houses, farm buildings and cottages, in so far as the improvements are made in order to comply with the provisions of any Statute or any regulations or by-
laws of a local authority. The proposed new Clause seeks to take that privileged position further by removing for two years the condition that the expenditure must have been undertaken to comply with the regulations of a local authority. The proviso which the hon. Member desires to take away is the only justification that I can see for the concession which enables owners of agricultural estates to obtain an allowance in respect of capital expenditure.

Mr. TURTON: It is on condition that there is no increase in rent.

Mr. HORE-BELISHA: That provision would be quite ineffective, because there would be nothing to prevent an increase in rent being obtained from a new tenant or from the sitting tenant at a subsequent date. There is nothing that would safeguard that position. Therefore, the provision would be ineffective. My hon. Friend will agree that capital expenditure is common to industry and to accept this Clause applied to agriculture alone while denying it to industry would be an untenable position. If you start upon a policy of allowing capital expenditure for the purpose of Income Tax, you would leave more money in the pockets of certain people which they may spend in all kinds of beneficent ways, but as receipts of a capital nature are excluded from Income Tax so should expenditure of a capital nature be similarly excluded. If the hon. Member desires to maintain the integrity of the Income Tax he will not press this Clause. One is naturally concerned at the prospects of the worthy enterprises that would be undertaken as a result of the acceptance of the Clause, but I am sure my hon. Friend will in justice admit that this concession could not be made to the agricultural community and be denied to the industrial community.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Lager beer (excise.))

The duty of excise and the excise draw-hack allowed in respect of beer brewed in the United Kingdom under section one of the Finance Act, 1933, shall be reduced as from the first day of July, nineteen hundred and thirty-four, by five per centum in the case of beer known as lager beer, that is to say, beer mashed by the decoction process and fermented by a bottom yeast at a temperature of under forty-five degrees Fahrenheit.—[Colonel Baldwin-Webb.]

Brought up, and read the First time.

8 p.m.

Colonel BALDWIN-WEBB: I beg to move, "That the Clause be read a Second time."
I should like to refer to the remarks made by a previous speaker that it is important that attention should be given to employment in rural districts. If the Chancellor of the Exchequer would accept the Clause employment in the rural districts would be generally helped. The Clause is framed in order to ventilate a grievance that exists in an important industry, or a section thereof, with regard to foreign competition. Lager beer, being an article dutiable under another enactment, cannot put its case before the Advisory Committee, and has to rely therefore upon the Chancellor of the Exchequer to deal with the situation. The consumption of lager beer represents 80 per cent. of the world consumption of beer, and consumption is going up in this country. I believe that one-third of the lager beer consumed here comes from abroad. It is produced abroad more cheaply, and is imported here at a price much below the cost of production in this country. During the past year the import of lager beer has gone up from 22,486 standard barrels to 32,480 standard barrels. That was during the period 1932–33 to 1933–34. It is an alarming increase. The Chancellor of the Exchequer himself said in this House only recently that the tastes of the public were shifting, and it is true to say that lager beer is becoming more and more popular. At the same time the import of foreign lager is increasing.
It is true to say that the new Clause as drafted does not deal with the situation adequately, but it is a means of ventilating this grievance, and I hope that the Chancellor will consider the matter with a view to remedying the situation at some future time. It is known to the Committee that a private Member cannot bring forward any Clause or Amendment which would have the effect of increasing taxation. Therefore, the Clause is drafted in another way. With regard to the advantage that the foreign brewer has over the English producer, I would mention that the English brewer has to pay a duty on the bottles, on the packing, corks, etc., that he imports, whereas the foreign brewer who imports his beer into this country pays no duty at all on the bottles, corks,
labels, straws, cases, etc. It is estimated that in a case of six dozen bottles of beer the value of the beer is probably not more than one-quarter of the, f.o.b. price, and the balance goes in bottles, corks, labels, straws, cases, etc. We should, therefore, be assisting a number of other industries in the country, all of which are valuable from the national standpoint. I would urge that this matter should be dealt with, and as I know other hon. Members wish to speak I content myself with those few remarks.

8.3 p.m.

Colonel Sir GEORGE COURTHOPE: Although I am not very hopeful that my hon. Friend the Financial Secretary will accept this Clause, I do hope that he and the Chancellor of the Exchequer will pay serious attention to the position which has arisen in connection with lager beer. Until a comparatively few years ago the method of brewing lager beer was especially a Continental one, but the beer became popular in this country, and large expenditure has been made here by certain brewing firms, with the result that we are now in a position to turn out admirable lager beer and can meet the whole demand. But the competitive imports are increasing at a very rapid rate. Normally if this industry was not the subject of a Revenue duty the matter would have been brought in the ordinary way before the Import Duties Advisory Committee, but that is technically impossible owing to the Revenue duty to which the beer is subject. Therefore, my hon. and gallant Friend who moved the Second Reading of the Clause adopted the only course that was open to a private Member, in order to draw the Government's attention to this matter, and that was to draft this Clause, although admittedly it is not a perfect solution.

8.5 p.m.

Mr. BOULTON: The ground has been covered so well by my hon. and gallant Friend the Member for the Wrekin (Colonel Baldwin-Webb) and by the hon. Baronet the Member for Rye (Sir G. Courthope), that I shall detain the Committee only a short time in order to emphasise two or three points. I would like to make it clear at the outset that the deduction of the Excise Duty of 5 per cent. which we propose by no means provides the protection which this industry
requires. As has been said, this Clause is only a means to an end, in order to allow this matter to be discussed. The Clause refers only to lager beer, and what I want to emphasis is that this is a new and developing industry. The consumption of lager beer is rapidly increasing and our manufacturers have been trying to meet the demand, which I am advised they can well do if it were not for the severe foreign competition. In support of that statement I would mention that the importations from abroad, according to the latest figures available, show that Danish imports have increased by 34 per cent., German by 60 per cent., Dutch 10 per cent., Czechoslovakian 12 per cent. Our manufacturers have spent considerable sums of money on new plant, which is very expensive, and they have spent considerable sums in other directions, for bottles, straws, labels and so on. One firm alone spent last year £70,000 on glassware and so on, apart from £30,000 in freight. This is apart from the benefit which agriculture derives from a growing industry of this kind.

The question of bottles has been referred to. These imported bottles from abroad come in free, but the British importer has to pay a duty on the foreign lager, and the bottles come into use again in this country and are actually sold in this country at something like 2s. a gross less than the price at which the British manufacturer can sell his bottles. If that is correct I think it is a hole that requires to be stopped. It is also anticipated that the increase in the sale of lager beer in this country will lead to an increase in the export trade, but when our manufacturers talk of exports they are up against heavy odds. I would give one instance of which I have been advised. I am told that Japanese brewers are today delivering lager beer in Calcutta at 13s. 6d. a case of six dozen bottles, whereas no English brewer can import the same quantity at less than 26s. if he is to make a profit. I am also advised that the Japanese Government is giving a subsidy of 5s. to the Japanese brewers for every case that they import into India at 13s. 6d. Therefore, when we come to the export trade there is very severe competition. Yet all the foreign countries that import lager beer into this country are imposing very heavy duties on British beers going into their countries.

Although I have no personal interest in this industry, it does seems to me to be a typical case of a new industry requiring Protection in its infancy. After all, if we are going to drink lager beer, let us drink British lager beer, which can be produced of a quality equal to anything that could be imported. What the trade really wants is to be allowed to put its case to the Import Duties Advisory Committee, with a view to having a duty imposed on foreign imports. This may require new machinery, but I do hope that the Chancellor of the Exchequer will be able favourably to consider the matter, and see whether he cannot give the protection-which is necessary for this new industry, or at any rate provide an opportunity for the industry to place its case before the Advisory Committee.

8.11 p.m.

Sir W. WAYLAND: The last hon. Member said, "If we are going to drink lager beer, let us drink British lager beer." I do not think we are going to drink lager beer. Lager is to all intents and purposes a foreign beer, a very cold beer, a beer which has been trying to "take" in this country for many years, and I hope will never succeed. Looking at the question from the point of view of employment, lager beer brewing does not employ anything like the same number of people per barrelage as our English beer. Secondly, take the materials. If lager beer were to oust English beer we could shut up most of our hop-fields, because the greater part of the hops used in lager beer are-German hops. When we take the plant we find that a great deal of it is bought outside this country. Then there is the barley used in the brewing of lager. A great part of it comes from abroad. So I hope that the Chancellor will not for one moment think of accepting this Clause. Next, I believe that we should protect all our industries from foreign competition. I should certainly be quite willing for the Chancellor of the Exchequer to put an extra duty of 50 per cent. upon all lager beer coming into this country if he also put 25 per cent. extra duty upon lager beer brewed in this country. Lager is consumed in this country by the middle classes, certainly not by the working classes. The working classes want something which warms them up a little more than lager beer. I do not think it will ever take root in the
United Kingdom. For those reasons, I certainly oppose the new Clause.

8.15 p.m.

Lieut.-Colonel HENEAGE: I do not entirely agree with the hon. Member because he rather suggests that they do not use British barley.

Sir W. WAYLAND: Partly.

Lieut.-Colonel HENEAGE: In saying "partly," my hon. Friend is rather going back on what he said. The ordinary brewers in this country partly use British barley.

Sir W. WAYLAND: Although the English brewers brewing British beer use a certain proportion of foreign barley, the lager beer brewer uses a very much greater proportion.

Lieut.-Colonel HENEAGE: At any rate, the lager beer brewers do use some British barley, so that from the point of view of the British barley growers we are interested in the acceptance of the Clause. I am informed that 4.2 barrels of lager beer use about one quarter of barley, and I do not see any reason why this should not be almost completely British barley. It is to the advantage of agriculture to encourage the manufacturer of lager beer. The practice of drinking lager is growing, probably at the expense of ordinary beer. That is a matter of fashion with which we cannot interfere artificially, but I ask the Treasury to watch the tendency of the fashion in drinking. We are certainly very much exercised that there may be anything like an increase in importation. I do not think the ordinary brewers have much to fear from the importation of ordinary beer, but the lager manufacturers certainly do fear an increased importation of foreign beer. As the taste in this country for lager increases, probably the importation will increase at the expense of the British barley producer, and, as I come from a part of the country which is mainly a barley country and is very much interested in this proposed Clause, I ask the Chancellor of the Exchequer to look into it.

8.18 p.m.

Mr. HORE-BELISHA: I am sorry to note the difference of opinion which has arisen about this new Clause, but I profit by it, because it shows how careful I must be in dealing with the subject. The
Clause as it stands would reduce by 5 per cent. the excise duty on British lager beer. The Customs, however, do not distinguish lager beer from other beers, and the duties, both custom and excise, apply equally to all types of beer without distinction. The effect of the Clause, therefore, would be to introduce a differentiation in the excise duty in favour of one particular type of beer brewed in this country based, not on a difference of gravity or alcoholic strength, but merely on the method of manufacture. That would clearly be grossly unfair on the brewers of other kinds of beer. It is not desirable to draw that distinction in the excise, and it is not practicable to impose a specal customs surtax on lager beer as such because it is not possible to distinguish finished lager beer as imported from other types of beer by any methods which could be applied by customs officers or even by chemical analysis. These are some of the technical difficulties.
I understand, however, that I am not intended to take the proposal of this new Clause literally, but to regard its introduction merely as an occasion to call attention to what may become a difficulty of the British lager brewing industry which, I understand, is making great progress. We have been told that the imports of lager beer have vastly increased. The Customs returns do not, for the reasons I have given, distinguish between lager beer and other beer, but, assuming that the beer which comes from Germany, Holland, Denmark and Czechoslovakia to be lager beer, I observe that the imports have increased between the 1st April, 1930, to the 31st March, 1931, from 29,300 barrels to 30,174 barrels. That does not seem a great increase, and the home production must be many times that figure.

Colonel BALDWIN-WEBB: Can my hon. Friend give the figures for last year?

Mr. HORE-BELISHA: The figures last year were 22,224. They fell from 1933, but they rose again presumably on account of the hot summer. I am not trying to make a point of this, however. I am merely trying to put the matter in perspective. It is an anomaly that this industry cannot go to the Import Duties Advisory Committee. We have not, I hope, reached the stage when it has
become necessary. The position can always be reviewed, and I hope that my hon. and gallant Friend and those who have supported him have performed a service in bringing this matter as one of substance before the Committee.

Mr. T. SMITH: Could the hon. Gentleman give the estimated cost of this new Clause to the revenue?

Mr. HORE-BELISHA: Because it would involve a general reduction, the Clause would cost between £2,000,000 and £3,000,000.

Colonel BALDWIN-WEBB: I hope my hon. Friend will not lead the Committee to believe that the proposal in the Clause would cost that amount.

Mr. HORE-BELISHA: The proposed Clause would be impracticable as drawn. It would involve a general reduction on all beers and it would cost the sum I have mentioned. If we could separate lager beer, the cost, of course, would be very much less.

Lieut.-Colonel HENEAQE: The Financial Secretary will realise, on his own figures, that if the barley were grown in this country it would make a difference of 10,000 quarters.

Question, "That the Clause be read a Second time." put, and negatived.

NEW CLAUSE.—(Amendment of 10 and 11 Geo. 5, c. 18.)

Sub-section (2) of Section three of the Finance Act, 1920, shall have effect as if for the words "nineteen hundred and twenty" "nineteen hundred and thirty-four" were substituted, and as if for the words "three pounds twelve shillings and sixpence" "two pounds ten shillings" were substituted.—[Sir A. Baillie.]

Brought up, and read the First time.

8.23 p.m.

Sir A. BAILLIE: I beg to move, "That the Clause be read a Second time."

This new Clause is intended to reduce what we believe to be a savage and monstrous tax to more reasonable proportions. I believe I could commend the new Clause better to the Financial Secretary if I confined myself to his own territory, that of revenue. It is at least on the ground of protecting or safeguarding the revenue that the Chancellor of the Exchequer used staunchly to resist the attacks from those who desired a reduction in the Beer Duty. It was only yesterday that the protection of the
revenue was given as a reason for not accepting an Amendment in regard to the Entertainments Duty, and only this afternoon it was given as one of the reasons for resisting a proposal to reduce the Oils Duty. As regards the Beer Duty, with which this has some possible prima facie connection, last year the Chancellor was finally convinced that the arguments which he had previously used were no longer tenable, and a reduction in the duty on beer was made. So far as I know, the results have been satisfactory to all concerned, and not least of all to the revenue and, therefore, to the Financial Secretary. I would like to quote a few words used by the Chancellor of the Exchequer last year in regard to the Beer Duty. He said:
Every tax has to be kept under constant supervision, so that the Chancellor of the Exchequer may judge how far it is able to stand an increase of the rate, or how near it has come to the point at which the law of diminishing returns begins to operate."—[OFFICIAL REPORT, 25th April, 1933; col. 55, Vol. 277.]

In the case of beer he found that a source of revenue which had brought comfort to many of his predecessors had been seriously undermined, the figures showing a drop of 33 per cent. If those figures are correct it seems to me that the Chancellor of the Exchequer must feel even greater concern in regard to the source of revenue from spirits, because I find this source of revenue has not only decreased by 33 per cent. but by somewhere in the neighbourhood of 100 per cent. There is one more important and relevant phrase in a speech made by the Chancellor of the Exchequer on the Second Beading of the Finance Bill, in which he said that if relief happened to be given to people who drank beer that was only incidental to the main purpose, which was to see that we should not have to impose further taxation in future owing to the contraction of the revenue from the beer duty.

I quote that because we are not in this case thinking of what happens to the consumers of whisky but are thinking of all those who are employed, directly or indirectly, as a result of the distillation of spirits, and also thinking of the Chancellor's main purpose, which is to safeguard his source of revenue. I will quote a few figures which, though possibly unfamiliar to Members of the Committee,
will be regrettably familiar, I am sure, to the Financial Secretary. As the duty on whisky has been raised so has the revenue from that source diminished. In 1919–20, when the duty was 50s. per proof gallon, the revenue from whisky amounted to £58,804,000 approximately. In the following year, when the increase in the tax, which had been raised to 72s. 6d., was first felt, the revenue increased; but that revenue has now decreased from, again approximately, £71,048,000 to £34,925,000 in the year 1931–32. With this downward trend in the revenue it must be manifest that the Chancellor is viewing with some concern and apprehension the decline in this source of revenue, which is a very find example of the law of diminishing returns. All we desire is to bring this matter once more to the notice of the Chancellor of the Exchequer and of hon. Members, and to ask the Financial Secretary if he will at least be with us in the spirit of the Amendment, and do something to amend what I know the Chancellor of the Exchequer will agree is a savage and monstrous tax, devastating in its effects on certain industries in Scotland and elsewhere, and devastating, also, on a source of revenue to the Chancellor of the Exchequer.

8.30 p.m.

Mr. JAMES STUART: I rise to support the new Clause. The hon. Baronet who has just spoken has dealt with the revenue side of the matter, and I will not go over that again, serious though the position undoubtedly is. I would like to call attention to the agricultural side of the question, and to agricultural employment as affected by this tax. The Secretary of State for Scotland recently appointed a committee composed of farmers and representatives of the distilling trade and they presented a report called the "Report of the Committee on Scottish barley for use by Scottish distilleries, 1934." If the hon. Gentleman looks into this report he will see in Appendixes 4 and 5 that in Moray alone the acreage under barley in the year 1907 was 11,896 acres, and in the year 1933 had fallen to 3,828 acres. If we take the total production of malt whisky in Scotland, in the years 1921 to 1925 the average production was more than 10,000,000 gallon's per year. Since 1925 there has been a steady decline in
the production; in 1932 it was only just over 2,000,000 gallons, and in the year 1933 it had fallen to 285,000 odd gallons. That means that the farmer in the barley-growing districts of Scotland has lost a market for his produce, and I would like to call the attention not only of the Chancellor of the Exchequer but of the Government to the very serious position that arises as a result.
In the past some of us have agitated continually for steps to be taken to assist the barley industry, but up to date little or nothing has been done in that connection. Id paragraph 27 of the report to which I have referred, under a summary of recommendations, we find that this Committee, composed of farmers and also of distillers, said that if at any time the position of the pot still industry should be stabilised owing to an adequate reduction in the duty on whisky, or to any other cause, then the distillers on their part would undertake to satisfy their whole requirements of malting barley or malt from Scottish barley suitable for distilling, and to pay a reasonable price therefor. If, therefore, the Chancellor of the Exchequer can grant a reduction in the duty it will provide a solution for a great part of the problem facing the growers of barley at the present time. Under existing conditions we see men thrown out of employment and land going back to grass, and in the north, as I think is understood, or as I hope is understood, the position is very serious in connection with barley, oats and so on, which are not receiving assistance from other Measures which have been passed by the Government, and it really is of very great importance that something should be done to assist the barley-growing districts.

8.35 p.m.

Mr. MACQUISTEN: A day or two ago when the Tea Duty was under discussion I pointed out that when there was no duty on tea we got very bad tea. A moderate duty secures quality both in tea and whisky. Scotch whisky can only be made in Scotland. I know that some whisky is made in Ireland, but for Scotch whisky you need Scottish water and the Highland air which goes into its making. You can distil alcohol in other places, but you cannot make what we call "Scotch" whisky or aqua vitae, as it was called by the monks who invented it. The clergy invented all good
drinks, and they called Scotch whisky the "water of life." It was really made by them and dispensed by them as a medicine, and it should be used as a medicine. If we were prepared to hand the dispensing of this medicine to the medical profession, it might make the National Health Insurance Act popular.
I am supporting this new Clause in the confident belief that the Chancellor will lose no money by it. The figures which have been adduced by one of my hon. Friends show how drastic is the taxation upon whisky. The Chancellor of the Exchequer is actually losing money in the present state of the taxation. The actual value of the contents of a bottle of whisky is something like one seven-thousandth part of the tax. There is not a halfpenny worth of barley in a bottle of whisky and there has never been such a grotesque taxation upon any commodity. It is the cruelest and harshest taxation of a trade which has provided millions of money to the British revenue. In Campbeltown there were at one time 18 distilleries, and now there is only one. All the decent fellows who have helped to build up the finances of Chancellors of the Exchequers in the past are unemployed and are wondering why their industry should be made the subject of such a savage duty.
We know what happened in the United States, and why the authorities there cannot put a tax upon liquor. The gangsters have such a grip that if a tax of more than a few shillings is put on liquor the bootleggers step in and supplant the legitimate traders. We have had an illustration of that in the discussion in regard to the drinking of methylated spirits. What a horrible thing that is. Because of the taxation on whisky, those poor wretches get into habits of drinking methylated spirits. The taxation prevents them from getting what is really a medicine and a much better medicine than people recognise. The man who takes whisky purely as a' drink finds that it does him no good when he is ill because he is acclimatised to it. If the total abstainer in normal times takes it when he has influenza he derives great benefit, as any intelligent and rational doctor will testify. The doctor will also say that the extravagant price is having a bad effect on the habits of all kinds of perfectly reputable people leading them to drugs of various kinds.
I urge the Chancellor of the Exchequer to repeal this savage taxation. There were two old ladies in Windsor who communicated with me and said it was very hard lines that the little nightcap which they took, and which was the sole pleasure which they had left—[Laughter]—t is not a very laughable matter to those who realise what old persons are like and how few are the pleasures that are left to them. It was not a laughing matter at all, and I was very sorry for the old ladies. [Interruption.] Some people never drink whisky, but when they interrupt idly you would think they had had a lot.

Mr. McGOVERN: It is much cheaper that way.

Mr. MACQUISTEN: Yes, but it is rather hard on the hearers. I know far-more about whisky than most hon. Members are ever likely to. In my constituency are more distilleries than in almost any other. It is a typically Scottish industry. One of the penalties we pay for the Act of Union is that this typically Scottish industry which benefits the British Exchequer, is being destroyed. The distillers pay huge taxation bringing in enormous revenue. There is no portion of agricultural land which yields so much revenue as the Island of Islay, whose industry is penalised and taxed to this fantastic height. If there were anything in Scottish Nationalism, this is a question that the Scottish nationalists ought to take up.
When a man buys a bottle of whisky he has broken so far into a £l note that it is almost gone. The reduction for which we are asking will reduce the price to 10s. The psychological effect of that decrease will be very great. If the Chancellor of the Exchequer gives us this reduction, his revenue will not fall off, but, if anything, will tend to increase. A man who now buys one bottle of whisky for 12s. 6d. will spend 20s. for two. I was once told by one of the policemen in this House whose home was in Ross-shire, 50 miles from a doctor, that all that was kept as medicine in the house by a careful mother was a bottle of whisky, and only when anyone was ill did they get any of it. Then they got well. I had the same experience on a large property of which I take charge, and we lost many natives from influenza. We lost no Europeans, for we had whisky for them, but none for
the poor black boys. If the price of the bottle of whisky is reduced to 10s., I am satisfied that the revenue will be increased—not by the people who indulge in whisky, but purely by people who want some form of stimulant and who will rejoice that they can buy two bottlee for £l instead of one bottle for 12s. 6d. The Chancellor of the Exchequer will lose no money, and I therefore ask that this proposal should be favourably considered.

8.44 p.m.

Mr. T. SMITH: The Chancellor of the Exchequer has missed a very great opportunity. We have heard the unemployment problem abolished about three times this evening. We were told that 5 per cent. reduction on lager beer would cure unemployment, and now we are informed that if the proposed new Clause is adopted unemployment will become Johnny Walker. I am wondering whether all the Scottish advisers of the Chancellor of the Exchequer sit on the back benches. This appears to be a simple Clause. It aims at reducing the duty on whisky from 76s. 6d. a gallon to 50s. Frankly, I am surprised that hon. Members who have gone into the Lobby, as they have during the last two days, to vote against every Amendment put from this side of the Committee, should now come along and say that the unemployment problem and all other problems would be solved if the price of whisky were reduced by half-a-crown a bottle. I would like to ask the Chancellor of the Exchequer what such a reduction would cost the State in the course of the year. It would be very interesting to know.
I quite appreciate the point of view of the hon. and learned Member for Argyllshire (Mr. Macquisten). His point of view is that, if the pric,e of whisky were reduced, there would be more of it drunk, and, if there were more of it drunk, more of it would be manufactured. If that be so, why stop at half-a-crown a bottle? Why not aim at abolishing the lot? Why not go on until everyone in the country is drinking whisky in order to solve our industrial troubles? The same argument could be applied to everything that is taxed by the State. In my opinion, hon. Members have lost all sense of proportion in bringing forward a Clause like this. Whisky may be good or may be bad; I do not know; I leave that
to the hon. and learned Member, who knows more about it than the Chancellor of the Exchequer, and certainly more than I do. I know what it tastes like, but personally I do not like it. Scotch whisky appears to be so good that I am wondering why Scotsmen allow it to drift below the Border. Why do they not keep it all for themselves, if it is so good?
I only rose for the purpose of asking the Chancellor of the Exchequer what this proposal would cost, in order that we might see what hon. Members opposite are seeking from their own point of view. We were arguing yesterday, and have been arguing for some days, that certain concessions ought to be given in other directions, but the Chancellor has said that he could not do it. Last night he made a very clear and I believe sincere speech with regard to the Entertainments Duty. He told the Committee that he would like to see the Entertainments Duty constructed differently, and he went on to say that he hoped to be in a position at some time in the future to alter it and to give some relief to the industry, but he had to oppose a reduction of the tax on the ground that it would take too much from the revenue. Here we have quite a modest proposal brought forward by six or seven very canny Scotsmen. They are asking for a very slight concession, and I sincerely hope that the Chancellor of the Exchequer will not give it. Indeed, I believe that hon. Members opposite would be astonished if they did carry such a proposal at this time of the country's history. If we have sufficient money to give a concession like this, we have sufficient money to use in directions which would be more beneficial to the State than ever this proposal could be, and I hope that the Committee will not pass it.

8.50 p.m.

Mr. TEMPLETON: It is not often that I speak in the House, and, as a matter of fact, I have seldom spoken at all. I rise now, not as a representative of any constituency where whisky is produced, nor as one who holds any shares in any whisky distilling concern. I want that to be thoroughly understood. I have no personal interest at all in the liquor trade. But I have a tremendous personal interest in my own country of Scotland. There is only one absolutely national monopoly that dear old Scotland has got,
and that is the production of that delectable beverage which the hon. Member opposite has tasted and does not like. There is no accounting for taste flow could anybody imagine that men in all parts of the world could have the same tastes in drinking, or eating, or anything else? I have known a man who did not like pie, but that man was not an enthusiastic opponent of the removal of duties from pie because he did not like it. My hon. Friend opposite, however, does not like whisky, and, therefore, he hopes that the Chancellor of the Exchequer will not accept this Clause.
I am standing here to support the proposal because I believe that, among all the industries of Scotland, and they are many and great, the one that conduces most to the spirituality of 'Scotland—[HON. MEMBERS: "Oh!"]—perhaps hon. Members will wait to hear all that I have to say—that is the one great Scottish monopoly. There is nowhere else on earth where you can produce whisky but Scotland. I have been assailed time and again in the purlieus of this Chamber by people who wanted me to support reductions of the duty on beer or on other things, because somebody is making a living from them, but this industry, which I once had the honour to represent in the House in a large way, has been left out in the cold. I was then Member for the County of Banff—I am sorry that the present Member is not in his place at the moment—in which there are 36 distilleries, and in the North of Scotland I know that there are at least three towns whose people are absolutely dependent for their very life upon the production of whisky.
It is unfortunate that this subject should be treated as a joke. After all, when anybody speaks about beer in the House, he is listened to with respect. All Englishmen drink beer, or at least we Scotsmen have that idea. An old friend of mine in the North of Scotland used to say, "No wonder these Englishmen are so strong, because they drink so much beer and eat so much beef." But we Scots are left among the mother-in-law jokes and the red-nose jokes; we are left among all the jokes that belong to the music hall and to the lighter moments of the people of this country. Although in my constituency we have nothing to do with the production of whisky, in the North of Scotland it is a
vital industry, not only to the distiller, but to the farmer and those who are associated with the farmer, and there the production of this beverage is absolutely necessary. It is the one big monopoly that belongs to the nation of Scotland, and a British Chancellor of the Exchequer who refuses to acknowledge the claims of that industry is doing much to forward the case of that Scottish Home Rule which I desire not to see brought in in this House or passed into law.

8.54 p.m.

Mr. TINKER: In this discussion we find ourselves, so to speak, meeting ourselves coming backwards. Last night the hon. and learned Member for Argyllshire (Mr. Macquisten) took part in the Debate on the Tea Duty. I did not see any reason why he should, because we were only arguing for taking off the duty on a beverage which we claimed was used by everyone. The hon. and learned Member objected to that, and said that to remove the tax would make for a bad quality of tea. Then I asked whether, if the taxation were taken off beer, that would make for a bad quality of beer, and the hon. and learned Member said "Certainly." Does not the same thing apply in this case?

Mr. MACQUISTEN: The hon. Member does not understand the difference between reason and unreason. A reasonable tax is one thing and an unreasonable tax is another thing.

Mr. TINKER: That depends upon the point of view. We claim that the tax on tea is entirely unreasonable, because tea is something that people almost have to use, while whisky is a luxury. [An HON. MEMBER: "A medicine."] If it be a medicine, it is well worth paying for for the benefit that you get from it. I claim whisky to be a' luxury. I am prepared, when I take it, to pay the tax on it thinking that I am getting full benefit. If it be taken as a medicine, again I am prepared to pay the tax for the benefit that I get from it.

Mr. MACQUISTEN: What about those who have no money to pay for it?

Mr. TINKER: If you have no money, you have to do without or trust to Providence to find someone else who will pay. When we were discussing tea, the hon.
and learned Gentleman did not talk about having no money, although the same thing applied. You cannot get tea without money. We are trying to get back the cuts that were put on in 1931. We claim that they are the first things to be put back. This tax has been on since 1912, and it cannot have any claim at all on our finances until all the cuts have been restored. Last night the Chancellor of the Exchequer told us that the Entertainments Duty and other things would be dealt with as soon as he could get the money. If this taxation were to be remitted, the other things that we tried to get last night would have to take a back seat unless the money could be provided in other ways.

Sir A. BAILLIE: I do not suggest that the remission of this tax would cost anything. Our point is that the law of diminishing returns has begun to operate. We want to safeguard the Treasury and to make it possible for the right hon. Gentlemna to restore all the cuts, which we believe he may have difficulty in doing if he does not give us our new Clause.

Mr. TINKER: If the hon. Gentleman's optimism did not come to pass and the Chancellor found himself with a deficit because he had given way on this, who would find the money for it? I cannot imagine that there would be any more whisky consumed if the tax were remitted, and I take my stand on that in opposing the Clause. It is not that I desire to increase the taxation on any commodity, but, if taxation has to be put on, I want it to be on non-essentials before it is put on essentials. I am more bitter against the hon. and learned Gentleman the Membere for Argyllshire than I should be but for the stand that he took last night. I could not believe in him trying to stop the reduction of the Tea Duty and trying to-night to get this tax remitted. I have spoken just to show him that my chief reason is that I want tea cleared of all taxation before we turn to whisky.

8.59 p.m.

Captain A. RAMSAY: There is an essential difference between the taxation of tea and of whisky. The tax on tea does not affect the whole tea supply but only a fraction of it. The best part of our tea comes from India and is not affected by the tax. I wish to support
my hon. Friends who have put the case for the remission of the Whisky Duty both in a serious and a jesting way. We have put it year in and year out. We base it on all sorts of solid grounds which I believe can be easily proved. We feel that one last method remains to us and that is the method of the importunate widow. She, it will be remarked, had to deal with a judge who feared not God neither organised man. If her importunity scored such a remarkable success in dealing with him, we, having a very different person to deal with in the Chancellor, shall continue to press our case in the justifiable hope that it will elicit something equally favourable. Although this subject may not arouse a great deal of interest here, north of the Tweed it is a serious matter. I regret the speech of the hon. Member for Normanton (Mr. T. Smith). The gist of it was that he did not care about whisky, and he did not care much what we said about it, and he was therefore in favour of keeping on the tax.

Mr. SMITH: My point of view was that, before you start taking the tax off whisky, you ought to take it off more essential things. I believe the tax on whisky is too high, but still I think other things ought to have precedence.

Captain RAMSAY: I am very glad to have got that admission. That improves what the hon. Member said a good deal. But it was a pity that he went on to produce a kind of reductio ad absurdum argument to the effect that you had only to take off the tax on whisky to cure unemployment. Ours was a reasonable argument in the beginning, but to follow it to that absurd conclusion was treating the matter in a way that will not be appreciated North of the Tweed even though it may be in the hon. Member's own constituency. If the right hon. Gentleman would make the venture, the sentimental effect in Scotland would repay him even if the trade effects that we have prophesied did not materialise.

9.3 p.m.

Mr. CHAMBERLAIN: I gather that my hon. Friends from the other side of the Tweed who have put down this Clause have done so rather with a view to keeping alive the claim that has so frequently been made in the past for the reduction of what they consider to be an unreasonable
tax than with any very lively expectation that I should find it possible to accept their Clause. My hon. and learned Friend the Member for Argyllshire (Mr. Macquisten), I believe, is of the opinion that, if the price of whisky could be reduced from 12s. 6d. to 10s. a bottle, the consumption would be doubled. I believe it is one of the exhilarating results of drinking whisky that you see things double, but they are not double for all that. I am afraid I have to take a more considered view of the actual fiscal effect of such a reduction as my hon. Friends desire me to make. I have had to make some sort of estimate of what it would cost in the immediate future if this reduction were made. I have assumed that it would result in the diversion of a quarter of the quantity of spirits at present imported into this country to homemade spirits, and the consumption of spirits would then increase by 15 per cent. In saying 15 per cent. I think I am taking certainly quite as venturesome an estimate as I ought to do. In that case, if that were so the concession would cost me nearly £6,000,00 in a full year, and £5,500,000 in the present year, assuming that the reduction was dated back as is proposed. Of course, it will be seen that to provide that £6,000,000, I could not do it this year, but even next year it would seriously diminish my resources for the purpose of carrying out a principle which I have so many times repeated as the one which must guide me in the present circumstances. Therefore, my hon. Friends will see that, on the calculations which I have made to the best of my ability, it is not possible for me to accept their Clause.
At the same time, I do not mind saying that, in my view, the tax on whisky is too high. I think that it is unreasonably high in modern conditions. It was fixed at a time when the sources of our indirect taxation were very much more limited than they are now, and I do not suppose that it would ever have been raised to that height if we had been a protectionist country in the days when the tax was increased. I have to take things as I find them. I have not only to consider the revenue as I find it, but the expenditure as I find it and expect it to be and, therefore, while I say that in my view, if I started afresh, I would not tax whisky
at the present rate, I think that when conditions are such as would allow of a fair reconsideration of the circumstances the claims of whisky for some reduction of the very high rate of duty now imposed upon it certainly ought to be considered. I am afraid that I cannot at this stage promise my hon. Friends that I can make any commitment for the future or, indeed, that I can prophesy the time when it will be possible to go some way in the direction they would desire.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Reduction of duties on certain classes of mechanically propelled vehicles.)

The rates of duty set out in the Seventh Schedule to the Finance Act, 1933, shall, as from the first day of January, nineteen hundred and thirty-five, he reduced by an amount equal to one-fourth of the said rates of duty.—[Mr. Holdsworth.]

Brought up, and read the First time.

9.8 p.m.

Mr. HOLDSWORTH: I beg to move, "That the Clause he read a Second time."
I have two purposes in view in moving this Clause: first of all, to draw the attention of the Committee to what, I think, is the grave injustice of the present taxation, and, secondly, to follow the good example shown by the Chancellor of the Exchequer in his Budget speech when he took off the 25 per cent. duty on private cars in order to stimulate the export trade. I do not suggest that if the present taxation on mechanically propelled vehicles were lowered that in itself would give a stimulus to the export trade in that particular section. Practically everybody in the Committee agreed with the Chancellor of the Exchequer in that reduction. There was an absolute specific purpose behind it, namely, to encourage the production of higher-powered cars which would meet the demand abroad for that type of car. If that was essential—and I agree that it was essential—in that particular case, I suggest that it is far more essential in this case, and from this point of view. It would be a great benefit to the export trade of this country if we had a very large export of heavy motor vehicles. The present duties, particularly as they were raised under certain sections of the Schedule last year, are acting against the production of the
heavier type of motor vehicles. I know that there are some Members in the House who were all in favour of it because they were against the heavy type of vehicles being on the road, and thought that it would make for greater safety, but even on that point I am not certain that their intention is correct. The Minister of Transport, I think, will agree that when a firm apply for their licence it is based on their tonnage. I think that in view of this tremendous tax—at least, I am so informed—men are putting aside the 10 and 12-ton vehicle and substituting for it six vehicles of two tons each, and thereby, I contend, making for the greater congestion of the roads. You do not help the traffic problem by taking off one vehicle and substituting six smaller vehicles.
The development of motor taxation in this country is a very interesting study. It was in the Budget of 1909, which was not only famous for this particular thing but for many others, that we first saw the introduction of motor taxation in this country. The horse-power tax, with the petrol tax of 3d. per gallon, was first imposed by that particular Budget, and it was assumed that during the year 1909–10 there would be a revenue accruing of £600,000. I do not think that that sum was actually realised, but the then Chancellor of the Exchequer in his Budget speech gave that as the estimate of revenue from the tax. The purpose of the tax was to raise a fund—I do not think there is any question on this point—in order that the road system of the country might be adapted to the needs of modern transport. The raising and using of the fund for that specific purpose were complementary to one another. In that Budget the commercial vehicles, the motor cabs and omnibuses, were taxed, and half the petrol duty was levied. I took the trouble, in order to make certain why this tax was imposed, to look up what the then Chancellor of the Exchequer had to say about the duty, and I will read the words used by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) on that occasion. He said that the £600,000 which was to be obtained by taxing motors and petrol:
shall be placed at the disposal of a central authority, who will make grants to local authorities for the purpose of carrying
out well-planned schemes which they have approved for widening roads, for straightening them, for making deviations round villages, for allaying the dust nuisance, and I should also propose that power should be given to this central authority to set aside a portion of the money so raised for constructing where they think it necessary and desirable, absolutely new roads."—[OFFICIAL REPORT, 29th April, 1909; col. 497, Vol. IV.]
It is interesting also to see that the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain), speaking at the same time—I want to prove conclusively why the tax was put on—used these words:
Our attitude towards the tax will depend upon the answer to that question."—
that is, what it was to be used for—
If it is going to the support of the roads, we think it is a very fair proposition; if it is intended to take it for general revenue then we shall oppose it."—[OFFICIAL REPORT, 29th April, 1909; col. 600, Vol. IV.]
The House at that time was in favour of the principle that the money raised should be used solely for the purpose of making the roads capable of meeting the needs of transport. I will only give one or two figures to show how the income grew in pre-War days. In 1909–10 the sum received was £312,000, but in 1915–16 it had grown to approximately £2,000,000. Then there was another change in this taxation. During the War period the motor vehicle tax was dropped and replaced by an additional tax on petrol, the reason given being that it was far easier to collect the tax in that way. When the War was over the petrol tax was dropped and the horsepower tax re-imposed, and in 1920 the right bon. Gentleman the Member for West Birmingham estimated that it would bring in a sum of £9,000,000. The right hon. Member for West Birmingham, who had agreed with the right hon. Member for Carnarvon Boroughs in 1909 that the tax should be used for the purpose of bringing the roads up to date, was of the same opinion in 1920, because in his speech he said:
I do not propose to claim any share of this taxation for the Exchequer.
Therefore, up to the year 1920 the same principle applied, but since that date there has been a tremendous change in the application of the tax, and now the Chancellor of the Exchequer takes the whole of the Petrol Duty, amounting to £36,000,000 together with £5,000,000
out of the amount which is raised by licence duties on vehicles, making the total which the Exchequer takes £41,000,000. If put in another way it is rather striking. If you take the estimated revenue for 1934–35 you will find that this amount of £41,000,000 represents 5.8 per cent. of the estimated revenue of the country. In 1928–29 the percentage was 2.5. In addition to that £41,000,000 the Road Fund receives £21,500,000 from licence duties, so that the total estimated taxation raised is £66,500,000, of which only £25,500,000 goes to the actual cost of the Road Fund in order to keep the roads of the country up-to-date. There was an article in the "Economist" on this subject about a fortnight ago in which figures were given of the total expenditure on the roads in 1931–32, the last complete year for which figures are available. The total was £78,500,000, and the article said that some of this was duplicated and that the net figure was £68,384,000. It also pointed out that about £6,000,000 was chargeable against public utility undertakings, frontages, and so on, and that the final figure of net expenditure was £62,500,000. I believe that there is a general misunderstanding throughout the country with regard to the payment for the upkeep of roads.

The DEPUTY CHAIRMAN: I have been listening to the hon. Member's argument very patiently and I cannot see any connection between it and the new Clause which he is moving.

Mr. HOLDSWORTH: I want to prove that there is excessive taxation, that as the tax was raised last year the motor industry is paying more than it should be called upon to pay for the cost of the roads. That is my purpose in quoting figures. I also want to suggest to the Minister of Transport that more money should come out of national taxation to pay for the roads——

The DEPUTY-CHAIRMAN: That is exactly a point which the hon. Member cannot raise on this new Clause. He is entitled to argue that less duty should be paid on vehicles but not that money shall be diverted to the Road Fund.

Mr. HOLDSWORTH: I accept, of course, your ruling, but there is no doubt that at the present time the total yield
of motor taxation considerably exceeds the total cost spent on the upkeep of the roads. In the Finance Act of last year tremendous increases were put upon certain vehicles. Take the heavy motor vehicle of nine to 10 tons. Before last year it paid a duty of £48, under the Finance Act that duty was increased to £170. One could go on and give many instances of increases of three and four times the amount of the tax on particular vehicles, and if we went into the scale of duties on vehicles using solid tyres we should find greater increases still. The taxation levied upon mechanically propelled vehicles is excessive. The public depends upon motor transport to a great extent to-day, almost entirely upon it for almost everything it uses and enjoys. This heavy taxation is also a burden on industry. Whatever may be our views as to the different modes of transport I am certain that most firms which have changed from the use of other forms of transport to motor transport are not likely to go back, and the cost in taxation in licences and Petrol Duty, if the right hon. Gentleman works it out, will be found to be equal to the cost of the wages of the men who drive the vehicles. That is a very excessive burden for industry to bear.
I have never understood why this particular form of transport should have to bear such a heavy burden. No matter where we sit in this House we are all agreed that we want to see an economic recovery. We do want to see progress made. My submission to the Committee is that by this excessive taxation we are preventing the natural development of the motor industry, placing a burden on industry in general, and asking from users of these particular vehicles far too much for the privileges that they enjoy.

9.26 p.m.

Mr. STANLEY: I hope the Committee will forgive me if I do not follow the hon. Member who moved this Clause in his exhaustive survey of the origin and development of the Road Fund. No doubt it raises questions of great importance, but they are not points raised by the Clause. This Clause is more restrictive and would simply have the effect of extending to hackney and commercial vehicles the same percentage of tax reduction as that for the horse-power taxation of private motor cars. There is little, of course, in the argument which
the hon. Member based upon the concession made by the Chancellor of the Exchequer to the vehicles taxed on horsepower. The purpose of that was to remove obstacles to high-powered cars, and in that way to facilitate the manufacture of high-powered cars for export. That argument is a substantial one when dealing with cars according to horsepower, but these vehicles are not taxed on horse-power at all.
The Committee will remember that last year there was introduced a new scale of taxation for these goods vehicles. It was exhaustively discussed during the passage of the Finance Bill, and I tried to explain the principles on which it was arranged. My hon. Friend says he has never been able to understand why commercial vehicles should be taxed in this way. Four of the leaders of the industry held clearly that taxation should be imposed as far as possible according to the damage done to the roads. That new scale was accepted by the House last year, and nothing has occurred in the last 12 months to show that the estimate was wrong. I might point out that it was anticipated by the Salter Committee that, while taxation might be raised on commercial vehicles, there should be lower taxation on private vehicles, and that by doing that the burdens they ought to bear would be more fairly adjusted from the point of view of damage to the roads.
When my hon. Friend makes a plea for heavy vehicles, I would remind him and the Committee of the extraordinary privilege heavy vehicles had for many years, owing to the fact that the old scale of taxation stopped at five tons. Ten-ton vehicles were only being taxed as much as five-ton vehicles. That was a position no one could defend. The cost of this new Clause if it were carried would be £2,000,000 in the current financial year, and approximately £3,500,000 in a full year, the whole of which would come out of the Road Fund. In conclusion, it might interest my hon. Friend to know that the gloomy prophesies which he made last year as to the effect of taxation of goods vehicles were quite unjustified; and the reports he has given of the industry to-day are inaccurate. I have here some rather startling figures of vehicles registered
during the first four months of last year under the old taxation, and the first four months in this year under the new taxation. During the first four months of 1933 the new goods vehicles registered numbered 15,936, and during the first four months of 1934 24,335, an increase of 8,399 or 52 per cent. since the new duties were imposed.

Mr. HOLDSWORTH: Has the Minister figures to show the differences in the weights of vehicles?

Mr. STANLEY: I am afraid I have not that. I think the hon. Member who is arguing for a reduction of the tax on heavy vehicles should remember that heavier vehicles enjoyed an unfair incidence in taxation, and he should not be surprised at taxation on a fairer basis. The commercial motor industry has continued to expand. In these circumstances, there is no case for the remission of taxation.

9.32 p.m.

Mr. ALED ROBERTS: I had not intended to intervene but to leave it to my hon. Friend, but when the Minister tells us that there is no analogy at all between the proposals we ask the Committee to consider and the remission of taxation on private motor cars already given effect to, I think he is really stretching the point a little too far. I read with care an hour ago the exact words of the Chancellor of the Exchequer which he used when he said he was going to reduce taxation on motor cars. Certainly he said he wanted to encourage the production of the higher horse-power cars, and that he did it in the interests of trade and employment. The analogy between this new Clause and the reason of the Chancellor of the Exchequer is a perfect one. What we are asking the Committee to do is to give the same treatment to motor goods vehicles as has been given to private cars.
The reason for that must be obvious to everybody. With the growth of the use of motor transport, which the Minister has pointed out is still expanding, the cost of motor transport enters into the cost of every product manufactured in the country. The cost of motor transport is considerable in the case of every article, and it seems to me, if we can reduce the overhead charges of transport,
we are proceeding on the same principle as in the case of the private motor cars. Surely it must have a beneficial effect on the prospects of employment throughout the country. That, I submit, provides the analogy which we desire to show between the horse-power tax which has been reduced and the tax which we ask should be reduced. Another statement by the Minister of Transport struck me as remarkable. He pointed out that when these duties were recommended last year, the reason given in the Salter Report was that the vehicles should be taxed in order to pay for the cost of the roads. It is a remarkable thing that the figure which was given for the cost of the roads corresponded almost exactly with the amount of money raised from motor transport plus the petrol tax. But the money raised from motor taxation has never been applied to the roads at all. If it is proposed to reduce the amount of the horse-power tax on private cars and to keep up the tax on commercial vehicles, a very unfair distinction is being made between the two. You are asking heavy transport and motor transport of all classes to pay for roads while at the same time leaving other road users alone, and you are not devoting to the roads the money which is raised out of motor transport.
I do not know why the Minister of Transport introduced that argument. If the Chancellor of the Exchequer were handing over all the proceeds of motor taxation for the roads I could understand it. As my hon. Friend explained motor taxation was raised in the first instance to provide for the development of the roads. That was a principle agreed to by all parties at the time, but it has been departed from since. I submit that it is not fair that one section of transport should be penalised to this extent. I think many hon. Members if it were put to them would admit that when these taxation proposals were before the House of Commons last year they desired to see the increased taxation on motor vehicles simply and solely because they thought it would help the railways. Since that time many of the new vehicles which have come on to the road have been nut on by the railway companies and the railway companies need help just as much as the road transport industry. Any reduction would be
a help to them just as much as to their competitors. The Chancellor of the Exchequer has given a remission to one form of transport on a certain principle, and I feel that in equity he ought to extend that principle to all these other forms of motor transport.

9.38 p.m.

Mr. HEPWORTH: It is not often that I intervene in Debate nor do I often agree with hon. Members opposite, but I confess that I agree entirely with the proposed new Clause which has been put before the Committee by the hon. Member for South Bradford (Mr. Holdsworth), and if it is carried to a Division I shall be compelled to vote against the Government on it. I was always under the impression that this Government had been sent here with a mandate to support industry, but the abnormal taxation which has been put on heavy vehicles is, to my mind, acting as a deterrent to industry. It has been said that we got a 25 per cent. reduction on licences in the last Budget. I think it would have been better if the 25 per cent. had been left on private cars and a 50 per cent. reduction given to commercial vehicles. Whatever the hon. Gentleman may think, road transport in this country has come to stay. The abnormal taxation that was put on commercial users of the road last year was put on in order to "boost up" the railway companies of this country and to stifle private enterprise. As I say, I regret that if the new Clause is put to a Division I shall have to vote against the Government.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Reduction of duties on certain licences.)

The duties on the following excise liquor licences, that is to say, retailers on-licences for spirits, beer, or wine, retailers off-licences for spirits, beer, or wine shall be reduced by twenty-five per centum.—[Lieut - Colonel Applin.]

Brought up, and read the First time.

9.40 p.m.

Lieut.-Colonel APPLIN: I beg to move, "That the Clause be read a Second time."

This new Clause proposes a reduction of 25 per cent. on excise liquor licences, for off-licences and for on-licences, in respect of spirits, beer and wine. A reduction of these duties is long
overdue and their continuance at the present rate is causing great hardship in the retail trade, the members of which feel that they have been unjustly treated. This proposal is to a certain extent a hardy annual, but I would remind my right hon. Friend that his predecessor the right hon. Gentleman the Member for Epping (Mr. Churchill) admitted that these licence duties were far in excess of what they ought to be in normal circumstances. I need not recall that it was as a result of the War that these duties were raised to just twice what they ought to be. When they were imposed in 1909–10 the number of hours on weekdays was from 17 to 19½ per day, whereas under the Licensing Act of 1921 the hours are reduced to from eight to nine per day while the duty remains the same. The principle that the duty should be in accordance with the number of hours was laid down in 1887 when Sunday closing was first introduced. On the closing of public houses on Sundays the licence duty was proportionately reduced and that established a precedent to which I think my right hon. Friend should have regard in this instance.

I do not know whether the financial position of the country would permit the Chancellor of the Exchequer to grant this concession but if it is at all possible I beg of him to grant it as a simple measure of justice. I am only asking for a reduction of 25 per cent. though really the reduction should be 50 per cent. I realise the difficulties with which the Chancellor of the Exchequer is faced and I do not ask him to do something which is impossible. But if this reduction were possible, it would be an enormous help to trade. I would also point out to him the effect of these duties. The reduction in the price of beer has not been passed on to the consumer and consequently the public house has very little advantage from that reduction. An examination took place a short time ago into the affairs of 24,000 tenants in. London and the provinces, and this revealed that no less than 42 per cent. had been obliged to receive financial assistance to enable them to carry on their business. The reduction in the price of beer has most certainly stimulated the trade, because I believe it has enabled the Chancellor of the Exchequer to obtain no less than
£5,000,000, but I do not think that either the on-licence or the off-licence has really benefited very greatly by that reduction, so I beg the right hon. Gentleman to consider this question very seriously.

9.46 p.m.

Sir W. WAYLAND: I should like to support this Clause. I am confident that the Chancellor of the Exchequer is sympathetic and knows that the licensed victuallers have been treated, I will not say unfairly, but in a sense unjustly. The taxes that the licensed trade pay have been based upon the valuation of the house. The tendency, I believe, throughout the country during the last 20 years has been to improve the public house, and therefore the valuation has gone up, and the licence-holder has had to pay an increased licence while the trade of his house has been diminishing. That is not fair. It certainly has been promised that this case should be looked into, but the exigencies of national finance have probably been the cause of its not receiving that treatment to which it can justly lay claim, and I think the time has now arrived when the Chancellor of the Exchequer should be prepared to give to the licensed victualler his due. He should be treated in the same way as any other section or trade, but he has always been looked upon as something different from an ordinary trader. He is nothing of the kind. He is a man who has heavy responsibilities and very heavy taxes to-pay, and he should certainly receive our sympathetic consideration. I noticed a few days ago these words in a review of a book. It is a quotation from Sir Edwin Lutyens, the eminent architect, who says, in the preface to the book called "The Modern Public House":
The Church is to the spirit as the inn is to the flesh, and if good they baulk the devil himself.

9.50 p.m.

Mr. CHAMBERLAIN: My hon. Friends have put their case with a brevity and moderation which disarm criticism. Indeed, I have only one comment to make upon the observations of my hon. and gallant Friend the Member for Enfield (Lieut.-Colonel Applin), and that is on his statement that my right hon. Friend the Member for Epping (Mr. Churchill) gave this concession in his Budget. He did not; if he had, it would not be necessary for the hon. and gallant Gentleman to ask for it now. What he did was to
say that if the Government of which he was a Member were returned to office again at the election which was then impending, he would give the concession. The result of that was that they did not return him to office, so that is not a very encouraging example to follow. Let me say that, while I cannot accept this Clause now, because it would cost me about £1,000,000, which certainly therefore would not come within my possibilities, I do not deny that there is a good case for a reduction of the duty when circumstances permit it, and though again I cannot speak for any future year in which I might not be here, my hon. and gallant Friend may perhaps be satisfied for the moment with that assurance.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Repeal of right of appeal to Board of Referees.)

There shall cease to be an appeal to the Board of Referees from any determination of the Special Commissioners given on or after the date of this Act pursuant to paragraph 1 of the First Schedule to the Finance Act, 1922, and save in respect of such determinations given before the date of this Act paragraph 2 of the said First Schedule is hereby repealed.—[Mr. Croom-Johnson.]

Brought up, and read the First time.

9.51 p.m.

Mr. CROOM-JOHNSON: I beg to move, "That the Clause be read a Second time."

This Clause seeks to do away with one of the many rights of appeal which exist under the Finance Act, 1922, and is one of the very few Clauses proposed in these discussions which have not aimed at a reduction of a duty, but is merely aimed at an improvement in procedure. It was found after the War, when taxation was high, that the national inclination of the people was so to order their affairs that they did not attract undue taxation, and that a number of people turned themselves into one-man companies, did not declare any dividends, drew on the money by borrowing from the company, and by that means succeeded in avoiding the duty of paying Super-tax, as it was then called. The Finance Act of 1922 accordingly provided that some steps should be taken by which that method of evasion might be stopped, so to speak, at the source, and the method adopted was that the Board of Referees, which had been
called into existence during the War for another purpose altogether, might give a direction that a company ought to have distributed a reasonable proportion of its earnings. I am putting it very briefly in order to save time.

From that direction there is a right of appeal to the Special Commissioners, a body set up under the Income Tax Acts, who have discharged their duties admirably and who have the respect and confidence of all classes of taxpayers, I think, who come before them. But the legislation goes on to provide, somewhat illogically, that when you get from the direction of the Board of Referees to the Special Commissioners, you may go back again from the Special Commissioners to the Board of Referees; and it does not stop there. No doubt, at the time, it was thought a necessary protection for the one-man company. Nobody desires,. I suppose, to give them undue protection, but at all events the situation does not stop there, because, having got back to the Board of Referees, there is a special provision in the Act of 1922 by which you may get the Board of Referees to state a case for the opinion of the High Court, and you may go from the High-Court Judge to the Court of Appeal, and from the Court of Appeal to the House of Lords. Therefore, we get a succession of appeals, and this new Clause is aimed at cutting out the appeal back again to the Board of Referees, the effect of which would be that there would be in this matter as in any other Income Tax and Surtax matter, an appeal to the High Court, by way of case stated, from the decision of the Special Commissioners.

I asked a question a little time ago, and got an answer from my hon. Friend the Financial Secretary to the Treasury on 2nd May last, which tells us how many of these appeals there are and what necessity there is for this multiplicity of appeals. In the five financial years ended this year the total number of appeals to the Special Commissioners from directions given by the Board of Referees was 304. So well did that body do its work that the total number of appeals from them back to the Board of Referees in the same period was only 32. That is to say, about 10 per cent. Of those appeals the directions by the Special Commissioners were confirmed in
whole or in part in 23 out of 32 cases. So that in only nine cases were the appeals wholly successful.

The Committee is probably aware that in connection with the subject of appeals in the law courts generally there has been sitting and has reported a committee under the presidency of the Master of the Rolls, Lord Hanworth, and there is a general consensus of opinion in the commercial world, in the legal world and in the world of litigants, if they are not comprised in one or other of those bodies, that it is very desirable there should not be an unlimited number of appeals, dragging litigants or the Government, as the case may be, from pillar to post, so that years elapse before you get a final decision. Here we find that we get the right of appeal from the directions of the Board of Referees to the Special Commissioners, back to the Board of Referees and then to three different tribunals in the High Court. Speaking as a practising member of the legal profession which must, I suppose, have derived some benefit from this state of affairs, I cannot think that such a state of affairs is for the benefit ultimately of any branch of the community whether they be taxpayers, tax gatherers, members of the legal profession or others interested in this litigation. That being so, while I have no doubt that there may have been some good reason in times past for this multiplicity of appeals, I suggest that the matter is well worth consideration at a time when a good many of us are engaged in overhauling our legal procedure in order to see whether in 1934 it is capable of improvement.

I would desire to add only one further observation upon this point. There has been sitting for some time a committee under the presidency of Lord Macmillan, one of the Lords of Appeal, whose name is well known to most of us, for the purpose of considering whether there should be any amendments and a possible codification of the laws relating to Income Tax. I hope that as a result of this question being raised in the Committee it may be possible, if the Chancellor of the Exchequer or the Financial Secretary is not able this evening to give effect to this modest proposal of legal reform, that the question will be submitted to that committee, so that the matter of appeal after
appeal may be brought before the attention of a committee of experts. Judging from the figures that I have given, if this right of appeal, this extra and unnecessary right of appeal, is cut out, the effect may be not merely that the taxpayers or those who are seeking to evade tax may be saved some legal costs but that the Government may be saved both time in the collection of the tax and expenditure in the getting of a final legal decision on the point.

10 p.m.

Mr. HORE-BELISHA: This is a proposal for the abolition of the right of appeal to the Board of Referees, under Section 21 of the Finance Act, 1922. The Board of Referees is composed of men of wide business experience, presided over by an eminent lawyer and there is no reason whatever to suppose that the taxpayers concerned would welcome the abolition of the right of appeal to the Board of Referees. Certainly no evidence has been brought before us to show that that is the case. My hon. and learned Friend seems to entertain the notion that the procedure is somewhat complicated. He has told the Committee that many parts of the Income Tax procedure are now under review, although he did not particularise what improvement he desired. I can assure him that as the majority of the appeals to the board are made on behalf of taxpayers, there is no indication at present that his proposal would meet with the approval of the taxpayers, and I am not in a position to accept the Clause this evening.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Amendment of s. 2 of 22 and 23 Geo. 5., c. 8.)

Section two of the Import Duties Act, 1932 shall be amended by adding, after the words "made to them," the words "by any person, including the Treasury and the Board of Trade."—[Mr. Caporn.]

10.3 p.m.

Mr. CAPORN: I beg to move, "That the Clause be read a Second time."
The purpose of the Clause is to clear up a little doubt which seems to have arisen upon instructions that may be given under Section 2 (3) of the Import Duties Act, 1932. Under that Sub-section the Import Duties Committee are instructed from time to time to take into consideration
any representations that may be made to them in respect of matters on which, under the provisions of the Act, action may be taken on recommendations made by the Committee, and they may make recommendations with respect to such matters. As the result of questions that have been put from time to time to the Chancellor of the Exchequer and the President of the Board of Trade it appears that the Government have taken the view that anyone who might apply to the Committee or make representation would not include a Government Department. I submit that it is both expedient and desirable under present conditions that the Government Department concerned should have the right and the power to appeal to the Committee under this Sub-section, so that they may have the advantage of receiving the advice of the Committee upon questions relating to revision or otherwise in respect of the duties which national interests make it desirable should be imposed. There are at least two occasions upon which it may be desirable that the Government Department should seek advice from the Committee. One is when the Government are negotiating a trade agreement with a foreign country. It may be highly desirable that the Committee should be consulted as to what would be the effect of altering an existing set of duties or providing for an increased duty on certain commodities. Another case is that in which the Committee have recommended under one Order a number of classes of goods, as occurred in the first Order which was made on the recommendation of this Committee. In order to make it quite clear that the Government have the right and power to make this request I have moved this Clause.

10.6 p.m.

Mr. HORE-BELISHA: I did not quite appreciate what was the proposed new Clause to which my hon. Friend was addressing himself, but I imagined it was the one which was put from the Chair. I cannot connect the arguments that my hon. Friend used with the exact words of this proposal, but perhaps if I deal with the Clause on the Paper I shall make myself plain. Sub-section (3) of Section 2 of the Import Duties Act reads:
The committee shall … from time to time take into consideration any representations which may be made to them with
respect to matters on which, under the provisions of this Act, action may be taken on a recommendation by the committee …
My hon. Friend desires that those representations should be made to them by any person, including the Treasury and the Board of Trade. Among the matters upon which action may be taken is the imposition of additional duties. The Import Duties Advisory Committee was established especially for the purpose of freeing Governments and Members of Parliament from what was considered to be improper pressure. It was constituted as an independent tribunal, and that is a position which we attach much importance to preserving. If my hon. Friend's Clause were accepted it would cause representations to be made, not to the committee but to the Government, for it would give the Treasury and the Board of Trade a special status to make representations. Instead of the committee being there to advise the Government, the suggestion is that the Government should advise the committee. The reason why we have to keep the two functions completely independent and why we do not reserve to ourselves the right to make representations or to bring pressure, is that we attach the utmost significance to the impartial status of the Advisory Committee. I can understand that criticisms may be made either of the work or of the committee, but I beg my hon. Friend not to press his new Clause, to allow us to keep the position as it now is with an independent Advisory Committee, and not to change the status.

10.9 p.m.

Mr. CAPORN: The last thing I desire to do is to change the status of the Advisory Committee. With great respect to the hon. Gentleman, I cannot see that in giving a right to the Government to request the committee to consider certain plain facts with a view to advising the Government—whether any, and, if so, what alteration should be made—we would in fact change the status; but seeing that my hon. Friend takes a different view I ask leave to withdraw my Motion.

Motion, and Clause, by leave, withdrawn.

Schedules agreed to.

Bill reported; as amended, to be considered upon Monday next, and to be printed. [Bill 137.]

STATUTORY SALARIES (RESTORATION) BILL.

Considered in Committee, and reported without Amendment; to be read the Third time To-morrow.

GAS UNDERTAKINGS BILL [Lords].

As amended (in the Standing Committee), considered.

10.17 p.m.

CLAUSE 3.—(Power for certain undertakers to pay underwriting commission.)

Mr. CLARRY: I beg to move, in page 3, line 9, after "capital," to insert "or debenture stock."
In Committee the Parliamentary Secretary referred to issuing debenture stock at a discount. This Amendment does not refer to that, but deals with underwriting commission paid on the issue of debenture stock. I understand that the proceeds of any issue of share capital can only be applied for the purpose to which the capital is properly applicable. I understand from the advice of counsel that the payment of underwriting commission is not a matter which can be dealt with as applicable to the use of capital issued in that way, and this Amendment is moved to give requisite Parliamentary authority for the payment of underwriting commission to be taken out of capital account.

Mr. ROSS TAYLOR: I beg to second the Amendment.

10.18 p.m.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): Debenture stock has always been in a position different from share capital. The matter is governed by case law and it would be most inadvisable if an Amendment were introduced haphazard, so to speak, in a Bill relating to gas undertakings which could be construed as casting some doubt on the law which is believed to be of entirely general application. There is, on my information, a clear rule followed by cases in the courts for showing that commission allowances or discounts paid for subscribing debentures have to be registered under the Companies Act, and it is inconceivable to think that the Companies Act would make it necessary to provide a registration
of the commission paid if there were any doubt as to the legality of paying the commission. For those reasons, I am advised that this Amendment is unnecessary and that the law already permits what the hon. Member desires; and as it would be inadvisable to insert a matter which would cause doubt on the generality of its application, I hope that he will not press the Amendment.

Mr. CLARRY: I beg to ask leave to withdraw the Amendment, and, in view of the Parliamentary Secretary's explanation, I do not propose to move other Amendments in my name to the same effect.

Amendment, by leave, withdrawn.

CLAUSE 6.—(Publication of prices by undertakers and consequences thereof.)

Dr. BURGIN: I beg to move, in page 8, line 13, to leave out paragraph (iii), and to insert:
(iii) prohibiting the undertakers, in a case where an enactment prescribes a basic price in respect of gas supplied by them and a basic rate of dividend payable by them, from paying a dividend in excess of a rate specified in the enactment, or making any payment for the benefit of employés or to a reserve fund, when the price charged by them to any person in respect of gas has equalled or exceeded a price so specified.
When this Bill was considered in Committee, there were a number of points which were covered by assurances that the matter would be investigated between Committee and Report. These matters have been investigated, and a number of Amendments stand in my name as a result of agreed changes in the Bill, which are drafting in character and are made to cover more adequately the purpose that was contemplated when the Bill was drafted. The Clause has been redrafted merely because the old Clause did not cover every case. The words that have now been used are apt to cover every case instead of only selected cases. The Clause has been agreed with the National Gas Council.

10.20 p.m.

Mr. RHYS DAVIES: I wonder whether I am right in assuming that the Gas Council is representative both of employers and workmen, because I see a reference to "any payment for the benefit of employés" and naturally we are very keen that employés should not lose anything by the passing of this Bill.

Dr. BURGIN: I can give that assurance at once. This paragraph is asked for by the industry, meaning thereby employers and employés.

Amendment agreed to.

10.21 p.m.

Dr. BURGIN: I beg to move, in page 8, line 22, at the end, to insert:
(v) requiring the undertakers to charge a different price for gas supplied as respects different areas.

This Amendment is made to meet a point which was raised in Committee. In some cases undertakers are required to charge a definite additional price, and it is necessary that they should be released from that requirement when entering into a special contract. Here, again, the matter goes no further than the assurance given in Committee.

Amendment agreed to.

Dr. BURGIN: I beg to move, in page 8, line 24, to leave out from "undertakers" to end of line 26.
In Committee I introduced an entirely new Clause, the Stand-by Supplies Clause, and the omission of these words is consequential on the insertion of that Clause, which is Clause 24, and of my proposed Amendments to that Clause, it now being no longer necessary to mention in Clause 6 the charges made by undertakers in respect of stand-by supplies. This is a purely drafting Amendment.

Amendment agreed to.

CLAUSE 7.—(Provisions as to special contracts.)

Dr. BURGIN: I beg to move, in page 9, line 33, at the end, to insert:
Provided that nothing in this subsection shall be taken to prevent the additional charge for the hire of a prepayment meter and any fittings used in connection therewith being calculated according to the number of therms or the quantity of gas supplied through the meter.
Doubts have been expressed as to whether Sub-section (2) of Clause 7 affects the practice and indeed the requirement of charging for the hire of a pre-payment meter and fittings by means of a charge per therm added to the price of the gas, and this Amendment is proposed to make it quite clear that this practice is not affected by the Sub-section, and that it is the price of the gas only which has to be the same, whether
supplied through a pre-payment meter or any other meter. They are words of clarity, which do not affect any question of principle.

10.24 p.m.

Mr. CLARRY: There is an Amendment in my name immediately following which is practically on the same lines, except that I think it makes the position even clearer than the Amendment proposed by the Parliamentary Secretary:
'Provided that nothing in this section shall preclude any undertakers from charging for the hire of a prepayment meter, and fittings to be used therewith, a sum of money calculated according to the number of therms supplied through such meter, which charge shall include the providing, letting, fixing, repairing, and maintenance of the meter and fittings or of the meter (as the case may be) and the costs of collection and other costs incurred by the undertakers in connection therewith.
There should be no doubt in the minds of consumers or undertakers as to what they are enterting into in the way of a contract, or what they ace going to get, and the object of my Amendment is to make perfectly clear the meaning of the word "hire." I sincerely hope that the Parliamentary Secretary will see his way to accept mine as being clearer and more desirable from the point of view of gas interests, both consumers and undertakers.

Dr. BURGIN: The Amendment which the hon. Member for Newport (Mr. Clarry) is proposing quite unwittingly——

Mr. SPEAKER: The hon. Member for Newport (Mr. Clarry) was speaking to his Amendment, when he should have been speaking to the one which is now before the House.

10.26 p.m.

Mr. CLARRY: I beg to move, in page 9, line 33, at the end, to insert:
Provided that nothing in this section shall preclude any undertakers from charging for the hire of a prepayment meter, and fittings to be used therewith, a sum of money calculated according to the number of therms supplied through such meter, which charge shall include the providing, letting, fixing, repairing, and maintenance of the meter and fittings or of the meter (as the case may be), and the costs of collection and other costs incurred by the undertakers in connection therewith.
I was anxious to speak before the other Amendment was put, because, if mine
had been accepted, that Amendment would have been unnecessary. I move mine formally now, and perhaps we may get some assurance from the Parliamentary Secretary on the subject of the additional clarity which I hope he will find embodied in my Amendment.

Mr. ROSS TAYLOR: I beg to second the Amendment.

10.27 p.m.

Dr. BURGIN: There is no difference between myself and the hon. Member for Newport (Mr. Clarry). The only question is as to how the matter should be expressed. The hon. Member has chosen a form of words which, I am sure, unwittingly, limits what he intends to do. He is well versed in the technicalities of these matters. Let me point out to him why his words would be a limitation. The effect of the Amendment upon undertakers who have not a provision relating to prepayment meters would be to limit the charges which they are at present entitled to make. They would be prevented from making a charge for the hire of a prepayment meter unless that charge included providing, letting and fixing. The hon. Member does not intend that result. What he intends is covered by the Clause which has already been amended. After that explanation, he may probably desire to withdraw his Amendment.

Mr. CLARRY: I beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

CLAUSE 14.—(Amendment as to deficiency in calorific value.)

10.28 p.m.

Dr. BURGIN: I beg to move, in page 16, line 16, at the end, to insert:
unless the mean of the average calorfic values of the gas supplied by the undertakers in the said area in the first mentioned quarter and in the last preceding quarter was equal to or greater than the declared calorific value.
This Amendment is to deal with tests and what is to be the accepted test. Representations were made that in a large area like the Metropolitan area, where there is a very large number of testing stations, it would not be fair to judge an undertaker merely upon the results of one testing station. An effort was made to counterbalance a deficiency in one area by an excess in another, but
the effort was resisted by the Board of Trade as it was quite impossible, for instance, in the case of the Gas Light and Coke Company, to permit a deficiency in Ilford to be counterbalanced by an excess in Staines, or some area equally remote. At the same time, every instrument that measures gas—or indeed anything else, so far as I know—is liable to experimental error. An effort has been made to be equitable to the undertaker and fair to the consumer.
How soon will an error in an instrument be detected, because, once an error is known, all the tests made by that instrument which is shown to be capable of error will obviously be invalidated? How far back are you to go? Instead of taking one test and penalising the undertaker as a result, an attempt has been made to find a form of words which will be just to both parties. The arrangement suggested is that the tests shall be averaged out over two quarters. There is no question of counterbalancing a deficit and a surplus, but if a deficiency is indicated, and if in the previous quarter there is an excess, you take the quarter with the deficiency and the quarter with the excess, and only say that there has not been the declared calorific value if, on the mean of the two, a deficiency is shown. The provision is obviously an equitable one, which does little more than put into the Statute what we should all recognise as the margin of experimental error. With this explanation, I trust that the House will give me the Amendment.

10.32 p.m.

Sir JOHN PYBUS: As I listened to the Parliamentary Secretary describing this perfect calculation, by which the purchaser of gas is to know what he is getting, it seemed to me to be all very complicated. As an electrical engineer, I was brought up on the plain volt and ampere. To calculate the units of electrical supply, you simply multiply the volts by the amperes. I should be glad if, before we leave this Amendment, we could have some assurance that the person who is using gas is not paying an extortionate rate for the apparatus, and that, on the basis of this weird calculation by which a deficiency in one area is made up by an excess in another, he is really getting value for his money.

10.33 p.m.

Dr. BURGIN: I think that the hon. Member has not quite followed the weird calculation. There is, of course, no question of making up a deficiency in one area by a surplus in another. It is the making up of a deficiency shown at a particular testing area by a surplus shown at the same testing area in another quarter.

Amendment agreed to.

CLAUSE 22.—(Amendment as to charge for fittings connected with a prepayment meter.)

10.34 p.m.

Mr. RHYS DAVIES: I beg to move, in page 22, line 17, to leave out the Clause.
Like the hon. Member for Harwich (Sir J. Pybus), I must declare at once that I am not an expert in gas undertakings. [HON. MEMBERS: "Oh!"] I said "undertakings". We discussed this Clause in Committee, and I want to say at the outset that I am not at all happy about it, because, if I remember rightly, the Clause was inserted for the first time in Committee upstairs. A gas undertaking is compelled to supply fittings to the person who uses gas. I understand that that has always been the case. But the insertion of this Clause will mean that the user of gas, the ordinary householder, will be able to make a written request for better fittings, which will be provided by the gas undertaking, and the householder, of course, will have to pay extra for them.
I feel that this arrangement might lead to a great deal of trickery. In spite of the fact that the Clause declares that a better type of fitting can only be provided on the personal request of the householder, I have too much knowledge of the people who knock at one's doors not to know how they can get the written request of any householder for almost anything. I am absolutely satisfied that some gas undertakings which are run for profit will just make the so-called better fittings appear a little superior, but the same fittings will be supplied at an enhanced rate, and I am afraid therefore, the Clause will operate against the person who uses gas.
I would not, however, oppose the Clause if all the undertakings of the country were outside the purview of those who make a profit out of the
supply of gas. If all undertakings were municipally owned, there is no reason to think that a municipality would want to make a profit out of these superior fittings. I know what is happening in another sphere of life. I am connected with National Health Insurance, and I have come across this sort of case more than once. There is a rule that insured people are entitled to a complete set of teeth for six guineas. Strangely enough, some dentists persuade a number of the insured population that, if they pay a little more, they can get a better set of teeth, and, when they supply the so-called better set, I am assured that they are of the same quality. That is exactly what I am afraid will happen in connection with these so-called better gas fittings. I was more unhappy about the introduction of this Clause when I remembered where it emerged from. I was, indeed, a little suspicious when I found that the hon. Member for Newport (Mr. Clarry) was championing a cause of this kind.

11.39 p.m.

Dr. BURGIN: I would ask the Committee to resist this Amendment. The matter is really very simple. Representations have been made to the Board of Trade that there is a demand by consumers who take their gas from a prepayment meter to have supplied to them on hire fittings or gas stoves of a class superior to that which the undertakers ordinarily supply. No rights are taken away from anyone by the Clause. It is an enabling Clause to put pre-payment gas customers on the same footing as people who have an ordinary meter. People who have an ordinary meter can hire any superior type of apparatus they like, and this is to put the person who has a pre-payment meter on the same footing. Before that is done, the consumer must show in writing that he understands that he is entitled to the ordinary fittings free of special charge and that he deliberately elects to have this special one at special rates because it is his own request. In theory there cannot be any objection to any clear understanding. It is enabling, and is asked for by consumers, and it is for that reason that the Board of Trade have thought fit to introduce it into this Bill, which is an enabling Bill for the gas industry as a whole.

Sir S. CRIPPS: Would the hon. Gentleman be good enough to explain why it is necessary to have this Clause? Would it not be possible for the ordinary consumer to make an independent arrangement with the gas company as regards the hire or purchase of any of those special fitments, if they so desire, irrespective of this Clause altogether?

10.41 p.m.

Dr. BURGIN: The answer is no, because you must have a statutory provision to amend the power of charging which at present exists. This Clause is so drafted that none of the restrictions of supply under which undertakers labour shall prevent them from doing those express things which they require. Of course, if every consumer cared to make a separate bargain with the undertaker, no doubt very few would take the matter to the House of Lords to determine whether it was ultra vires. I am advised that it cannot be intra vires. As the Department dealing with the administration of this subject, I am advised that it is necessary to amend the law, and that this Clause is the appropriate way to do it.

CLAUSE 24.—(Stand-by supplies.)

Dr. BURGIN: I beg to move, in page 23, line 19, to leave out "minimum."
This is a drafting Amendment which, with the two following Amendments, makes quite clear that the charge made by undertakers for a stand-by supply of gas is not a charge made for gas actually supplied, but is in respect of the capital expenditure in providing a stand-by Clause. It is an agreed Clause.

Amendment agreed to.

Further Amendments made:

In page 23, line 19, after "sum," insert "in addition to any charge for gas supplied."

In line 24, leave out "minimum," and insert "said."—[Dr. Burgin.]

CLAUSE 27.—(Avoidance of provision in lease, etc., preventing supply of gas.)

10.44 p.m.

Mr. RHYS DAVIES: I beg to move, in page 26, line 6, to leave out the Clause.
If hon. Members will be good enough to follow this Clause they will find that it is usually termed the Kettering principle, which, as far as I remember, was a Clause inserted in the Kettering Local Authority Bill. The Clause with which we are now dealing is also inserted in some local enactments of the London Gas Light and Coke Company. We are informed that when this Clause was inserted in those two local Acts of Parliament it was never intended that it should be included in a Bill to cover the whole of the country. The Clause, as we find it in this Bill, is, however, in a different form. The hon. Gentleman the Parliamentary Secretary, I understand, has put down some Amendments, and he has already been in negotiation with the Urban District Councils Association and the Association of Municipal Corporations. I do not know whether he has satisfied both bodies by his Amendments to the Clause, and before we decide what to do by way of carrying our opposition to the Clause to the Division Lobby, we should like to hear what he has to say with regard to the negotiations he has had with the two bodies most closely concerned with the matter.

10.46 p.m.

Captain GUNSTON: I have always been opposed to any local authority attempting to make their tenants take one particular form of contract, and I am glad to see that the Parliamentary Secretary has an Amendment down to safeguard the rights of tenants. At the same time, local authorities took the view that the Clause as drafted went much too far, and that its result would be that no local authority would be able to make a contract with a tenant without the gas company being able to say that it would seriously affect them and, therefore, that no contracts would be made. The Urban District Councils Association have been in communication with the Department, and I have a letter from them to say that they are satisfied with the Amendments which the Government proposes to make.

10.47 p.m.

Major HILLS: I agree that the Amendments proposed to be made by the Minister to the Clause do materially improve it, but I should prefer, and local authorities would also prefer, that the
Clause should be withdrawn altogether. I agree that it is much better than the original proposal, and that it follows a Clause which has appeared in several private Acts. But in the case of a private Act the local authority and the parties concerned have an opportunity to appear before the court and state their case, Here we are applying to the whole undertaking a Clause which has been restricted to certain districts. That is not a good thing to do. I do not agree with the hon. and gallant Member that the Clause is altogether acceptable to local authorities. They like it much better than the original proposal, but at the same time would prefer that it should be withdrawn, because it goes a long way in making a rule which has so far been limited through private Acts to local application apply to the whole country.

10.48 p.m.

Lieut.-Colonel HENEAGE: I agree with the right hon. Member for Ripon (Major Hills) that local authorities do not like this Clause altogether, and they would like it much better if the Parliamentary Secretary does not move the last Government Amendment, to insert the words:
and it shall be unlawful to attempt to enforce such a provision

10.49 p.m.

Major MILNER: The main object of the Bill is to give effect to the recommendations of a Departmental Committee appointed by the Board of Trade. The particular proposal we are now discussing was not before that Committee. If I am wrong I will withdraw that statement. If that were so, I respectfully suggest to the Government that it is not a proper thing to introduce this provision at this stage. It is perfectly true, as the right hon. and gallant Member for Ripon (Major Hills) says, that certain improvements have been introduced, but the restriction on local authorities still exists. The only thing the Amendment does is to restrict the matter to houses belonging to the local authority itself. I much hope that the Parliamentary Secretary will not persist in his Amendment to the Clause, introduced at this late stage, and will be willing to withdraw the Clause altogether, and thereby satisfy the Municipal Corporations Association, who, I understand, were not consulted in any way, though they were consulted on other matters in the Bill, giving evidence
before the Departmental Committee on the matters the Government seek to introduce in this Bill.

Dr. BURGIN: The hon. and gallant Member was completely misinformed. The matter was on the Order Paper, though not much discussed in Committee.

Sir STAFFORD CRIPPS: It was put down the night before.

Dr. BURGIN: It was put down on 16th May. An understanding has been reached, and the last Amendment will not be moved. The Clause has been amended since it was put on the Paper in Committee, in order to meet a number of criticisms made from various quarters, and from the Association of Municipal Corporations and the Urban District Councils Association. The Board of Trade do not desire to do more than prohibit a local authority taking advantage of this provision, and to have conditions making that prohibition effective. We are advised that the new Amendment in my name meets these criticisms and, as the right hon. and gallant Member for Ripon (Major Hills) says, it has been accepted by the Urban District Councils Association with the assurance that the Amendment will not be amended, and I think it will satisfy the Municipal Corporations Association.

Major MILNER: Is it true that this subject was never before the Departmental Committee? It was before a Committee of this House, but was it ever discussed by the Departmental Committee on whose recommendations the whole of this Bill was founded?

Dr. BURGIN: No, it was not.

Major HILLS: May I say that the Association of Municipal Corporations prefer the Clause to be withdrawn?

Sir S. CRIPPS: It is not really very satisfactory, in my submission, so far as this Clause is concerned. There was a Departmental Committee to inquire into the right content of this Bill, and, considering the report of that Committee, is it a right or proper thing to introduce a provision such as this in the Bill? During the Committee stage, the matter came up for discussion. The Clause was put down by those who spoke for the gas companies. The Committee were taken by surprise at
this Clause which was accepted by the Government, apparently without any consultation with the municipal corporations or the urban councils and without any reference to the departmental committee which, of course, had reported at that time. The municipal corporations take the view, I understand, that a Clause of this sort should not be inserted in this Bill without a thorough inquiry. It is one thing to insert such a Clause in a Bill like the Kettering Bill when a Committee of this House has had before it evidence of local conditions and circumstances and has come to the conclusion that, in the light of those circumstances, a Clause of the kind ought to be put into that particular Bill. But the casual way in which this Clause has been accepted by the Government is shown by the Amendments which the hon. Gentleman has now on the Paper.

The Clause which the hon. Gentleman accepted in Committee was perfectly monstrous. It is difficult to imagine anybody accepting it. It would have prohibited a local authority from entering into any arrangement with anyone in the district as regards lighting any house whatever under contract terms. Apparently there has been no investigation at all. It was not until the matter was brought to the hon. Gentleman's attention shortly before the Report stage that he or his department realised what an extraordinary Clause it was. Clearly they had not taken the trouble to investigate it before they accepted it on the Committee stage. We suggest that a matter of this importance should not be hurriedly pushed into a Bill like this without consideration or consultation, at the request of the gas companies—not on the motion of the Goverment, be it noted, but at the request of an interested party. We ask the hon. Gentleman to withdraw the Clause and leave the matter to be considered if necessary by some departmental committee before any action is taken. Whatever the merits may be, this is clearly a question upon which municipal corporations and others ought to be heard before judgment is given against them and in favour of the gas companies. There is a clear issue between the two parties. There has been no inquiry; it has received no Committee consideration at all, and on those grounds we ask the hon. Gentleman not to proceed with the
Clause. If he does, we shall have to go into the Lobby against it.

10.59 p.m.

Captain CROOKSHANK: The hon. and learned Gentleman based the first part of his argument apparently on the idea that the House should not put this Clause into the Bill because it had not been considered by a specific departmental committee.

Sir S. CRIPPS: I must correct the hon. and gallant Member. I said that this Clause had been put in by one of the interests concerned. I said that all the rest of the Bill had been considered and advised upon by a departmental committee, but that this Clause had never been advised upon and was not put into the Bill on the motion of the Government.

Captain CROOKSHANK: I know that was the hon. and learned Member's other point but I think his first point was that the departmental committee had not considered it and I only wish to safeguard the House from any assumption that we cannot discuss the inclusion of a Clause in a Bill because there has been no recommendation from a departmental committee. I go with the hon. and learned Member on his second point. I have no knowledge of the technicalities of the Bill and, incidentally, as it is almost Eleven o'clock I hope that there will be an opportunity to consider this matter further on another day.

It being Eleven of the Clock, the Debate stood adjourned.

Debate to be resumed To-morrow.

MATRIMONIAL CAUSES (PROCEDURE IN SUITS FOR NULLITY) BILL [Lords].

The remaining Orders were read, and postponed.

ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Captain Margesson.]

Adjourned accordingly at One Minute after Eleven o'Clock.